sectorial study on

8/8/2019 Sectorial Study On

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Sectorial study o n

STEEL INDUSTY

Submitted by:

1)Animesh kotal

3)Abhishek das

2)Kousik ghosh 4)Gyanranjan

sahoo

5)Ugro sen 6)Kushal

pal Rana


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INSTITUTE OF MANAGEMENT AND DEVELOPMENT

NEW DELHI

Declaration

This project work was undertaken for partial fulfillment of the course M.B.A

Under Maharishi Dayanand university, Rohotak. We have not submitted this

Project work anywhere else.

Animesh kotal

Gyanranjan sahoo

Abhishek das

Kousik ghosh

Ugro sen

Date:

Place: NEW DELHI ...

(signature)


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IMD New Delhi At A Glance

IMD is an is an institute of Management studies for M.B.A +PGPM

courses

IMD constantly endeavors to help the student to develop a good and brightfuture.

The students are highly faciliatated with the books and magazines relatedto the project.

The problems, which has come up during the preparation of the projectare eliminated with the help of the study center.


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ACKNOWLEDGEMENT

Exchange of ideas generators a new object to work in a better way.

Whenever a person is helped a cooperated by other, his heart is bound to

pay gratitude and obligation to them. Every work requires a n assistance

and support, without which no work may be done away with. The

completing a present project file, we were also in a need of the support

and assistance and we were support by all to whome demanded.

Here , we would like to thank all the people who and indirectly help in

completing the work. We thank our honourable vice chairman

Mr. Abhishek Choudhary, IMD, whomes of also deems us like his own

off springs, guided us authentically and provided us every facility.

In the way of the project wok many times we face survisal implication

where we were in between the horns dilemma, but my well wishers did

leave me in such an ordeal situation for a long and sorted out the very

problems by there valuable guidance and knowledge.

We are grateful to him for providing all the necessary facilities and for

their continious advice time to time.

Now, beg pardon all, whose name has been forgotten unintentionally.


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Contents

Objective of the study


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The basic objective of steel university.org is to inform university students and theirteachers about steel technologies and to attract young people to the global steelindustry. Another major aim is to reduce the cost of in-service training at steel

companies by providing them with freely available training and professionaldevelopment material

In view of the decline in metallurgy-related courses in universities and theretirement of professors and steel industry experts, it aims to sustain knowledge offerrous metallurgy by joint efforts of academia and the steel industry.

A goal orobjective is a projected computation of affairs that aperson or a systemplans or intends to achievea personal or organizational desired end-point in somesort of assumed development. Many people endeavor to reach goals within a finitetime by setting deadlines.

Introduction

Indias economic growth is contingent upon the growth of the Indian

steel industry. Consumption of steel is taken to be an indicator ofeconomic development. While steel continues to have a stronghold intraditional sectors such as construction, housing and groundtransportation, special steels are increasingly used in engineeringindustries such as power generation, petrochemicals and fertilisers.
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India occupies a central position on the global steel map, with theestablishment of new state-of-the-art steel mills, acquisition of globalscale capacities by players, continuous modernisation and upgradation ofolder plants, improving energy efficiency and backward

integration into global raw material sources.

Steel production in India has increased by a compounded annual growthrate (CAGR) of 8 percent over the period 2002-03 to 2006-07. Goingforward, growth in India is projected to be higher than the worldaverage, as the per capita consumption of steel in India, at around 46 kg,is well below the world average (150 kg) and that of developed countries(400 kg). Indian demand is projected to rise to 200 million tonnes by2015. Given the strong demand scenario, most global steel players areinto a massive capacity expansion mode, either through brownfieldGreenfield route. By 2012, the steel production capacity in India isexpected to touch 124 million tonnes and 275 million tonnes by 2020.While greenfield projects are slated to add 28.7 milliontonnes,brownfield expansions are estimated to add 40.5 million tonnes tothe existing capacity of 55million tones .

Steel is manufactured as a globally tradable product with no major trade

barriers across national boundaries to be seen currently. There is also noinherent resource related constraints which may significantly affectproduction of the same or its capacity creation to respond to demandincreases in the global market. Even the government policy restrictionshave been negligible worldwide and even if there are any the same torespond to specific conditions in the market and have always beentemporary. Therefore, the industry in general and at a global level isunlikely to throw up substantive competition issues in any national

policy framework. Further, there are no natural monopoly characteristics

in steel. Therefore, one may not expect complex competition issues asthose witnessed in industries like telecom, electricity, natural gas, oil,etc.

This, however, does not mean that there is no relevant or seriouscompetition issue in the steel industry. The growing consolidation in the


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steel industry worldwide through mergers and acquisitions has alreadythrown up several significant concerns. The fact that internationally steelhas always been an oligopolistic industry, sometimes has raisedconcerns about the anticompetitive behavious of large firms that

dominate this industry.

On the other hand the set of large firms that characterize the industry hasbeen changing over time.Trade and other government policies have significant bearing oncompetition issues. Matters of subsidies , non-tariff barriers to trade,discriminatory customs duty (on exports and imports) etc. may bring insignificant distortions in the domestic market and in the process alter thecompetitive positioning of individual players in the market. The specificrole of the state in creating market distortion and thereby the competitiveconditions in the market is a well-known issue in this country.

This report proceeds as follows. Section 2 of the report provides a briefover view of the performance and structure of the Indian steel industry

by analysing published secondary time series data on certain keyindicators. Market structure is analyzed using indicators such as numberof players and their respective shares in total production, share of public

and private players in the total production/sales, production capacity ofmajor players, etc. Given the heterogeneous nature of the product thisanalysis is done for the various segments of steel that constitute therelevant market.

This analysis is a precursor in identifying segments where competitionmay be an issue of concern to allow for a pointed analysis. Section 3 ofthe report documents policy and institutional structure governing thesteel industry in India and the role played by the Government in the

development of this industry.

Section 4 of the report examines issues of competition of steelindustry in India, by identifying the structurally inherentand the market determined positions of various steelfirms specifically to see their market power, vis--vis both


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their final consumers as also those within the steelindustry. The issues emerging out of the size and marketshares, specifically taking into consideration theinvestment aspects are also discussed in this section.

The other issue of significant importance in the context ofcompetition is the command over natural resources thata few players possess and that enable a significant costadvantage over the rest in the market.

These are the result of government policies of the past, tosupport growth of a particular industry.

These preferential policies and their impact oncompetition are also analysed in this section.Section 5 concludes with a discussion on state of thecompetition in the Indian steel sector pointing to a fewkey recommendations for the Competition Commission ofIndia. Appendix I, II, III and IV provide data on the sector,and briefly discuss international conditions, and provide

an historical overview.

This study finds little evidence of any cartelization or jointpricing behaviour on the part of the incumbents. It findsthat government intervention, and slow responsivenessto changing conditions has contributed to shortages inthe past, which in turn leads to action by the incumbentsthat look like, but is not, anti-competitive behaviour.

Unequal access to raw material, as well as export/importcurbs, are the key issues affecting the creation of a levelplaying field. It is the last two as well as ready availabilityof information on costs and prices across the value chainthat could warrant some action by the regulator.


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Steel Industry in India: Overview,Performance and StructureBackground

The establishment of Tata Iron and Steel Company (TISCO) in 1907was the starting point of modern Indian steel industry. Afterwards a fewmore steel companies were established namely Mysore Iron and SteelCompany, (later renamed Vivesvaraya Iron & Steel Ltd) in 1923; SteelCorporation of Bengal (later renamed Martin Burn Ltd and Indian Iron


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& Steel Ltd) in 1923; and Steel Corporation of Bengal (later renamedMartin Burn Ltd and Indian Iron and Steel Co) in 1939.1 All thesecompanies were in the private sector.

Key Events1907*: Tata Iron and Steel Company set up.1913: Production of steel begins in India.1918: The Indian Iron & Steel Co. set up by Burn & Co. to compete withTata Iron and Steel Co.1923*: Mysore Iron and Steel Company set up1939*: Steel Corporation of Bengal set up

1948: A new Industrial Policy Statement states that new ventures in theiron and steel industryare to be undertaken only by the central government.1954: Hindustan Steel is created to oversee the Rourkela plant.1959: Hindustan Steel is responsible for two more plants in Bhilai andDurgapur.1964: Bokaro Steel Ltd. is created.1973: The Steel Authority of India Ltd. (SAIL) is created as a holdingcompany to oversee most of

India's iron and steel production.1989: SAIL acquired Vivesvata Iron and Steel Ltd.1993: India sets plans in motion to partially privatize SAIL.

At the time of independence, India had a small Iron and Steel industrywith production of about a million tonnes (mt). In due course, thegovernment was mainly focusing on developing basic steel industry,

where crude steel constituted a major part of the total steel production.Many public sector units were established and thus public sector had adominant share in the steel production till early 1990s. Mostly private

players were in downstream production, which was mainly producingfinished steel using crude steel products. Capacity ceiling measures wereintroduced. Basically, the steel industry was developing under a


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controlled regime, which established more public sector steel companiesin various segments.

Till early 1990s, when economic liberalization reforms were

introduced, the steel industry continued to be under controlled regime,which largely constituted regulations such as large plant capacities werereserved only for public sector under capacity control measures; priceregulation; for additional capacity creation producers had to take licensefrom the government; foreign investment was restricted; and there wererestrictions on imports as well as exports.

Undoubtedly there has been significant government biastowards public sector undertakings. But not all government action has

been beneficial for the public sector companies. Freight equalizationpolicies of the past were one example. The current governmental moral-suasion to limit steel price increases is another.

However, after liberalizationwhen a large number ofcontrols were abolished, some immediately and others graduallythesteel industry has been experiencing new era of development. Majordevelopments that occurred at the time of liberalization and thenceforth

were:1. Large plant capacities that were reserved for public sector wereremoved;

2. Export restrictions were eliminated;3. Import tariffs were reduced from 100 percent to 5 percent;4. Decontrol of domestic steel prices;5. Foreign investment was encouraged, and the steel industry

was part of the high priority industries for foreign investments and

implying automatic approval for foreign equity participation up to 100percent; and

6. System of freight ceiling was introduced in place of freightequalization scheme.


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As a result, the domestic steel industry has since then, becomemarket oriented and integrated with the global steel industry. This hashelped private players to expand their operations and bring in new costeffective technologies to improve competitiveness not only in the

domestic but also in the global market. Private sector contribution in thetotal output has since been increasing in India. Development of privatesector has caused high growth in all aspects of steel industrythat is capacity, production, export and imports. During the last decademore than 12 mt of capacity has been added in the steel industry, this ismostly in the private sector. Recently, the steel industry is receivingsignificant foreign investments such as POSCOSouth Korean steel

producerand Arcelor-Mittal GroupUK/Europe based steel producerannouncing plans forestablishing about 12 mt production units each inIndia.

The Indian steel industry, with a production of about 1 mt atthe time of independence, has come long way to reach the production ofabout 57 mt in 2006-07. Moreover, the steel industry is showing

promising future growth as major players in the industry haveannounced their plans for significant investments in expanding theircapacities.

Impressive development of the steel industry with activeparticipation of private sector and integration of India steel industry withthe global steel industry has also induced the government to come upwith a National Steel Policy in 2005. The National Steel Policy 2005was drafted with the aim of establishing roadmap and framework for thedevelopment of the steel industry. The policy envisages steel productionto reach at 110 mt by 2019-20 with annual growth rate of 7.3 percent. Aslater sections will show these expectations are not excessively high.

With increasing need for large investments in the industry privatesectors role would be crucial in the development of the steel industry.The future, it appears, will continue to be dominated by afew large

players and the industry will remain oligopolistic as it isinternationally. Moreover, as shown in Appendix I share of fixed cost to


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total cost for selective steel producers in India is very high making itprone to increasing returns to scale and the consequent market structure(See Table A1.8). TISCO, public sector entities, POSCO, Jindals, Essar,and Arcelor-Mittal will be among the major players accounting for the

bulk of the 100 plus million tons of production in thefuture.There is a key factor behind the predominance of large units andoligopolistic industry structure. And that is the production process. Thefollowing section discusses the process and underlyingtechnology.

Steel production processesBlast furnace/basic oxygen furnace (BF/BOF):BF basically convertsiron ore into liquid form of iron. Iron produced by BF contains highamount of carbon and other impurities, this iron is called pig iron. Pigiron due to its high carbon content has limited end use application suchas covers of manholes. To make steel products out of pig iron it isfurther processed into BOF where its carbon content and otherimpurities are burnt or removed through slag separation. Main inputs toBF are iron ore and coal/coke. BOF is also called oxygen furnace

because oxygen is the only fuel used in the process. Generally,integrated milling use BF/BOF routes to produce finished steel.Producers that use this technology include SAIL, RINL, TSL and JSWL.

Electric Arc Furnace (EAF):Basic purpose of the EAF isremelting sponge iron, melting scrap, its main inputs, to producefinished steel. It uses electricity as much as 400-500 kWh/ton. ISPAT,ESSAR, and the Jindal group are examples of producers, which use this

technology.

COREX or Cipcor Process:COREX is an advance process ofmaking steel. Though few use this process, it is possible to use non-coking coal directly in smelting work and it also makes it possible to uselump ore and pellets as inputs. These two advantages allow steel


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producers to eliminated coking plants and sinter plants. Purpose ofcoking plant is to convert non-coking coal into more efficient fuel and

purpose of sinter plant is purify lump ore or pellets for furtherprocessing. Basic inputs to COREX are iron-ore and coal. Jindal Iron &

Steel Company (JISCO) uses COREX technology to produce finishedsteel.

Induction Arc Furnace (IAF):is one of the most advanceprocesses of making steel. Like EAF it uses electricity as its main fuel.IAF is most environment friendly and efficient way of producing steel.However, its lack of refining capacity requires clean products as itsinputs. Large numbers of small steel companies use this technology.The high weight of the product significantly pushes up transport andmovement costs. Therefore large integrated plants are the norm for costefficient production. For specialized steel and alloys efficientproduction by smaller plants is possible.

Steel ProducersBroadly there are two types of producers in India viz. integrated

producers and secondary producers. Integrated steel producers havetraditionally integrated steel units have captive plants for iron ore and

coke, which are main inputs to these units. Currently there are threemain integrated producers of steel namely Steel Authority of IndiaLimited (SAIL), Tata Iron and Steel Co Ltd (TISCO) and RashtriyaIspat Nigam Ltd (RINL). SAIL dominates amongst the three owing to itslarge steel production capacity plant size.Secondary producers use steel scrap or sponge iron/direct reduced iron(DRI) or hot briquetted iron (HBI). It comprises mainly of Electric Arc

Furnace (EAF) and Induction Furnace (IF) units, apart from othermanufacturing units like the independent hot and cold rolling units,rerolling units, galvanizing and tin plating units, sponge iron producers,

pig iron producers, etc. Secondary producers include Essar Steel Ltd.,Ispat Industries Ltd., and JSW Steel Ltd. There are 120 sponge iron

producers; 650 mini blast furnaces, electric arc furnaces, inductionfurnaces and energy optimizing furnaces; and 1,200 re-rollers in India.


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The integrated producers constitute most of the mild steel production inIndia. Their main products include flat steel products such as HotRolled, Cold Rolled and Galvanised steel. They also produce long and

special steel in small quantities. On the other, secondary producerslargely produce long steel products.Re-rollers are the units that come under secondary producers category,and produce small quantity of steel like long and flat products. Theseunits either procure their inputs from the market or through their

backward integrated plants. They use sponge iron, pig iron orcombination to produce finished steel or ingots.

Types of steelSteel is an iron based mixture containing two or more metallic and/ornon metallic elements usually dissolving into each other when molten.Since it is an iron based alloyas per its end use requirementsotherthan iron it may contain one or more other elements such as carbon,manganese, silicon, nickel, lead, copper, chromium, etc. For example,stainless steel (a type of steel) mainly contains chromium that isnormally more than 10.5 percent with/without nickel or other alloyingelements. Steel is produced using Steel Melting Shop that includesconverter, open hearth furnace, electric arc furnace and electricinduction furnace.There are broadly two types of steel according to its composition: alloysteel and non-alloy steel.Alloying steel is produced using alloyingelements like manganese, silicon, nickel, chromium, etc.Non-alloy steelhas no alloying component in it except that are normally present such as

carbon.Non-alloy steel is mainly of three types viz. mild steel (containsupto 0.3% carbon), medium steel(contains between 0.3-0.6% carbon)and high steel (contains more than 0.6% carbon). All typesof steel otherthan mild steel are called special steel. It is mainly because a special careis takenin order to maintain particular level of chemical composition insuch steel.


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This process givesdifferent properties to the steel according to itscomposition. In India, non-alloying steelconstitutes about 95 percent of

total finished steel production, and mild steel has large share in it.

According to shape/size/form steel is categorized into different typessuch as liquid steel, ingots, semis (semi-finished steel) and finished steel.Liquid steel is a first product that comes out from Steel Melting Shop.Liquid steel further goes into ingots, and then ingots advance to semis.Semis are called semi-finished steel products because they are furthersubject to forging/rolling inorder to produce finish steel products suchas flat steel products and long steel products. Crudesteel generallyincludes ingots and semis.According to end use, steel is categorized intostructural steels, construction steel, deep drawingSteel, forging quality, rail steel, etc. The following chart depicts varioustypes of steel products according to different categories.


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History of steelmaking


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Ancient steel

Steel was known in antiquity, and may have been produced by managing

bloomeries, iron-smelting facilities, where the bloom contained carbon.The earliest known production of steel is a piece of ironware excavatedfrom an archaeological site in Anatolia (Kaman-Kalehoyuk ) and isabout 4,000 years old. Other ancient steel comes from East Africa,dating back to 1400 BC.In the 4th century BC steel weapons like theFalcata were produced in the Iberian Peninsula, while Noric steel wasused by the Roman military. The Chinese of the Warring States (403221BC) had quench-hardened steel, while Chinese of the Han Dynasty(202 BC 220 AD) created steel by melting together wrought iron withcast iron, gaining an ultimate product of a carbon-intermediate steel bythe 1st century AD. The Haya people of East Africa discovered a type ofhigh-heat blast furnace which allowed them to forge carbon steel at3275 F (1,800 C) nearly 2,000 years ago. This ability was notduplicated until centuries later in Europe during the IndustrialRevolution.

Wootz steel and Damascus steel

Evidence of the earliest production of high carbon steel in the IndianSubcontinent was found in Samanalawewa area in Sri Lanka.Wootzsteel was produced in India by about 300 BC.Along with their originalmethods of forging steel, the Chinese had also adopted theproductionmethods of creating Wootz steel, an idea imported into China from India

by the 5th century AD. In Sri Lanka, this early steelmakingmethodemployed the unique use of a wind furnace, blown by the monsoonwinds, that was capable of producing high-carbon steel.

Also known as Damascus steel, wootz is famous for its durability andability to hold an edge. It was originally created from a numberofdifferent materials including various trace elements.It was essentially a complicated alloy with iron as its main component.Recent studies have suggested that carbonnanotubes were included in


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its structure, which might explain some of its legendary qualities, thoughgiven the technology available at that time, they were produced bychance rather than by design.

Natural wind was used where the soil containing iron was heated up

with the use of wood. The ancient Sinhalese managed to extract a ton ofsteel for every 2 tons of soil, a remarkable feat at the time. One suchfurnace was found in Samanalawewa and archaeologists were able to

produce steel as the ancients did long ago.Crucible steel, formed by slowly heating and cooling pure iron andcarbon (typically in the form of charcoal) in a crucible, was produced inMerv by the 9th to 10th century AD. In the 11th century, there isevidence of the production of steel in Song

China using two techniques:a "berganesque" method that produced inferior, inhomogeneous steeland a precursor to the modern Bessemer process that utilized partialdecarbonization via repeated forging under a cold blast.

Modern steelmaking

Since the 17th century the first step in European steel production has

been the smelting of iron ore into piiron in a blast furnace.Originallyusing charcoal, modern methods use coke, which has proven to be agreat deal cheaper.Processes starting from bar ironIn these processes

pig iron was "fined" in a finery forge to produce bar iron (wrought iron),which was thenused in steel-making.

The production of steel by the cementation process was described in atreatise published in Prague in 1574 and was in use in Nuremberg from1601. A similar process for case hardening armour and files was

described in a book published in Naples in 1589. The process wasintroduced to England in about 1614.

It was produced by Sir Basil Brooke at Coalbrookdale during the 1610s.The raw material for this were bars ofwrought iron. During the 17th


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century it was realised that the best steel came from oregrounds ironfrom aregion of Sweden, north of Stockholm.

This was still the usual raw material in the 19th century, almost aslong

as the process was used.Crucible steel is steel that has been melted in acrucible rather than being forged, with the result that it is morehomogeneous. Most previousfurnaces could not reach high enoughtemperatures to melt the steel. The early modern crucible steel industryresulted from the invention of Benjamin Huntsman in the 1740s. Blistersteel (made as above) was melted in a crucible or in a furnace, and cast(usually) into ingots.Processes starting from pig iron

The modern era in steelmaking began with the introduction of HenryBessemer's Bessemer process in1858. His raw material was pig iron.This enabled steel to be produced in large quantities cheaply,thus mild steel is now used for most purposes for which wrought ironwas formerly used. TheGilchrist-Thomas process (orbasic Bessemerprocess) was an improvement to the Bessemer process,lining the converter with a basic material to remove phosphorus.Another improvement in steelmaking was the Siemens-Martin process,which complemented the Bessemer process.

Production

Steel production reached 28.49 million tone in April-september 2009.Further, India, which recorded production of 22.14 MT of steel during


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April-August 2009, is likely to emerge as the worlds third largest steelproducer in current year, according to GOUTAM KAOU BASAK,excutive joint plant committee(JPC)

The national steel policy has a target for taking steel production up to110 MT BY 2019-2020. Nonetheless, with the current rate of ongoingGreenfield and bownfield projects, the Ministary of steel has projectedIndias steel capacity is expected to touch124.06 MT by 2011-2012. Infact based on the status of memoranda of understanding signed by the

private producer with the various state govt, Indias steel capacity islikely to be 293 MT by 2020

Production Steel industry was delicensed and decontrolled in 1991&1992

respectively.


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Today, India is the 7th largest crude steel producer of steel in theworld.

In 2008-09, production of Finished (Cardon) Steel was 59.02million tones.

Production of Pig Iron in 2008-09 was 5.299 Million Tonnes.

Last 5 years production of pig iron and finished (carbon) steel isgiven below:

(In million tones)Catagory 2004-05 05-06 06-07 07-08 08-09

Pig iron 3.228 4.696 4.998 5.312 5.260

Finishedcarbon steel

40.062 44.534 55.416 58.223 59.01

(Source:joint plant committee)


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`Steel production procedure


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Global Scenario

In 2007 the World Crude Steel output reached 1343.5

million metric tons and showed a growth of 7.5% over theprevious year. It is the fifth consecutive year that worldcrude steel production grew by more than 7%.

China remained the worlds largest Crude Steel producerin 2007 also (489.00 million metrictons) followed by Japan(112.47 million metric tons) and USA (97.20 millionmetric tons). India occupied the 5 th position (53.10

million metric tons) for the second consecutive year.

The International Iron & Steel Institute (IISI) in itsforecast for 2008 has predicted that 2008 will be anotherstrong year for the steel industry with apparent steel userising from 1,202 million metric tonnes in 2007 to 1,282million metric tonnes in 2008 i.e. by 6.7%. Further, theBRIC ( Brazil, Russia, India and China) countries willcontinue to lead the growth with an expected increase inproduction by over 11% compared to 2007.

Domestic Scenario

The Indian steel industry have entered into a new

development stage from 2005-06, riding high on theresurgent economy and rising demand for steel. Rapid

rise in production has resulted in India becoming the 5 th

largest producer of steel.


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It has been estimated by certain major investment

houses, such as Credit Suisse that, Indias steel

consumption will continue to grow at nearly 16% rate

annually, till 2012, fuelled by demand for constructionprojects worth US$ 1 trillion. The scope for raising the

total consumption of steel is huge, given that per capita

steel consumption is only 40 kg compared to 150 kg

across the world and 250 kg in China.

The National Steel Policy has envisaged steel

production to reach 110 million tonnes by 2019-20.

However, based on the assessment of the current

ongoing projects, both in greenfield and brownfield,

Ministry of Steel has projected that the steel capacity in

the county is likely to be 124.06 million tonnes by 2011-

12. Further, based on the status of MOUs signed by the

private producers with the various State Governments, it

is expected that Indias steel capacity would be nearly

293 million tonne by 2020.

Demand- Availability Projection

Demand Availability of iron and steel in the country is

projected by Ministry of Steel annually.

Gaps in Availability are met mostly through imports.

Interface with consumers by way of a Steel Consumer

Council exists, which is conducted on regular basis.


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Interface helps in redressing availability

problems, complaints related to quality.

Steel Prices

Price regulation of iron & steel was abolished on

16.1.1992. Since then steel prices are

determined by the interplay of market forces.

There has been an up-trend in the domestic steel

prices since 2006-07 and the trend

accentuated since January this year.

Rise in raw material prices, strong demand in the

international and domestic market and uptrend in the

global steel prices have been some of the reasons cited

by the industry for increase in the steel prices in thedomestic market.

The mismatch in demand and supply is considered to

be the main reason on the demand side for the rise in

steel prices. Honourable Steel Minister has held

discussion with all major steel investors including

Arcellor-Mittal, POSCO, Tata Steel, Essar, Ispat and also

SAIL, RINL to explore the possibility of expediting the

ongoing as well as envisaged steel projects.

The Government also took various fiscal and other

measures for stabilizing the steel prices like exempting


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pig iron, non alloy steel and steel making inputs like zinc,

ferro-alloys and metcoke from customs duty; withdrawing

DEPB benefits on export of various categories of steel

products and bringing back railway freight on iron orefrom classification 180 to 170 for domestic steel

producers.

In May 2008, the Government imposed 15% export

duty on semi-finished products, and hot rolled

coils/sheet, 10% export duty on cold rolled coils/sheets

and pipes and tubes and 5% export duty on galvanized

steel in coil/sheet form in order to further curtail risingprices and increase supply of steel in the domestic

market.

Imports of Iron & Steel

Iron & Steel are freely importable as per the

extant policy.

Last five years import of Finished (Carbon) Steel

is given below:

Year Qty, (In million tonnes)

2004-2005 2.109

2005-2006 3.850

2006-2007

(partly estimatted)

4.436

2007-2008 6.581


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2008-2009

(partly estimatted)

5149

Exports of Iron & Steel

Iron & Steel are freely exportable.

Advance Licensing Scheme allows duty free import of

raw materials for exports.

Duty Entitlement Pass Book Scheme (DEPB) introduced

to facilitate exports. Under this scheme exporters on the

basis of notified entitlement rates, are granted due

credits which would entitle them to import duty free

goods. The DEPB benefit on export of various categoriesof steel items scheme has been temporarily withdrawn

from 27th March 2008, to increase availability in the

domestic market.


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Exports of finished carbon steel and pig ironduring the last five years and the current year is as

:

Exports (Qty. in million tonnes)

Year Finished(carbon

)steel

Pig iron

2004-2005 4.381 0.393

2005-2006 4.478 0.440

20006-2007

(prov.estimated

)

4.750 0.350

2007-2008 4.627 0.560

2008-2009

(prov.

estimated)

3.482 0.350

Role of Government

In the pre reform era, the ministry of steel played the roleof key regulator and was involved in decision makingrelated to pricing, allocation and distribution. Withdismantling of the strict regulatory regime, the role ofGovernment in all sectors has changed to that of a


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facilitator. So is true of the steel industry. In the post-de-regulation period, the role of the Ministry of Steel is nowconsidered that of a facilitator. This is how thegovernment itself sees its role.13 The box belowexcerpts

the annual report of the Ministry overseeing the steelsector.

Given the oligopolistic features of the steel industry, therole of Government in promoting competitive forces inthe industry is of some importance. Governmentintervention may be called for, especially to protectlarger consumer interests. But whether it is done via

policy or through some regulatory/judicial mechanism isthe question of interest. However, the governmentcontinues to intervene in ad-hoc ways through itsadministrative ministry on and off. For instancegovernment's diktat to the steel producers to hold pricesdown in the face of rising domestic andglobal demandfor steel is a clear example of government's undueintrusion in the market.


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Excerpts from Annual Report 2007-08,Ministry of Steel, Government of India.

Role of the Ministry

1. Providing linkage for raw materials, rail movementclearance etc. for new plants and expansion of existingones.

2. Facilitating movement of raw materials other than coal

through finalization of wagon requirements and ensure anun-interrupted supply of raw materials to the producers.

3. Interaction with All India Financial Institutions toexpedite clearance of projects.

4. Regular interactions with entrepreneurs proposing toset up new ventures, to review the progress of

implementation and assess problems faced.

5. Identification of infrastructural and related facilitiesrequired by steel industry.6. Promoting, developing and propagating the proper andeffective use of steel and increasing intensity of steelusage particularly in the construction sector in rural andsemi urban areas, through the setting up of Institute forSteel Development and Growth (INSDAG) in Kolkata.

7. Encouraging research & development activities in thesteel sector. There is an institutional mechanism throughwhich financial assistance is provided from Steel


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Development Fund for this purpose. Efforts are beingmade to further augment R&D activities in the country.

8. Interacting with State Governments to provide power

at reduced/ concessional tariffs especially to mini steelplants all over the country. Similarly, the freight ratesadopted by the Railways have been rationalized afterinter action with the Railway Board and freight cost onraw material transportation for steel producers isreduced.

9. Rationalizing the classification of coking coal in

consultation with the Coal Ministry so as to reduce theimpact of royalty payable on this basic raw material.Import duties on several raw materials, such as, scrap,ships for breaking, coke, non-coking coal etc. used by thesteel industry has been reduced steadily over the past 4-5 years.

Analysis of Competition in the Steel Industry

Steel products vary by size, shape, chemistry andphysical characteristics and the same have to satisfy alarge number of physical and chemical properties, ifdestined to industrial or critical construction applications,at the higher end of vertical product chain. Moreover,given that a steel plant has limitations in producing everygrades and shapes on account of diseconomies of scaleand technical constraints, competition for each getsconfined to only smaller number of players. It makes,therefore, little sense to talk about the industry as awhole to understand the nature of competition in themarket. Therefore, each major product is being takenseparately for examination.


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Flat ProductsFlat products are rolled mostly from semi-finished formscalled slabs. There are two streams of flat productsoriginating either from a plate mill (Plates) or a hot stripmill/ steckel mill (HR coils). Usually, plates are useddirectly. The HR coils (HRCs) are used directly too, but,most of them are further rolled and processed to produce

items such as cold rolled sheets/coils, coated sheets andcoils, pipes, etc.. HR coils are the most importantintermediate products for various reasons.

Production and Domestic Sales of HRCoils/sheets/plates 2003-04

(000 tonnes)

Producers Domestic production Dom.Sales

Sales as %ageof prodn

SAIL 2548.0 4648.054.8

Tata Steel 1306.0 2846.045.9

JSW Steel 1300.0 1300.0100.0


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Essar Steel 1700.0 1700.0100.0Ispat Industries 1500.0 1500.0100.0

Other Secondary 985.0 985.0100.0

Total 9339.0 12979.072.0.

Production and Domestic Sales of HRCoils/sheets/plates 2003-04(000 tonnes)


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Producers Domestic ProductionDom. Sales

sales as %ageof Production

SAIL 2945.2 4830.461.0

Tata Steel 1352.0 3030.044.6 JSW Steel 1189.3 2148.055.4Essar Steel 1761.5 2580.068.3Ispat Industries 1810.2 2143.084.5

Other Secondary 1052.0 1052.0100.0

Total 10110.2 15783.464.1


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IISCO


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IISCO Steel Plant of Steel Authority of India Limited(SAIL) is located at Burnpur, near Asansol. The turbulenthistory of the plant, starting from its pioneering days, hasfound it a place in industrial history.

It was the second integrated steel plant, after Tata Ironand Steel Co. Ltd. (TISCO) at Jamshedpur, to come up inIndia and for many years, these two were the only steelplants in the country. It has rich history that goes back tothe days when James Erskine pioneered the production ofiron in this country at nearby Kulti. Modern metallurgywas introduced to India at Kulti with the setting up of thefirst blast furnace using coal instead of charcoal.

Emergence of KultiJames Erskine founded the Bengal Iron Works in 1870. Hisopen top furnaces using raw coal (instead of coke as isnow done), poor grade iron ore available locally andbullock carts for transportation went into operation in1875 at Kulti, then better known as Kendwa. It was a bigleap forward for Indian metallurgy. Although India had

been producing steel from ancient times, all suchattempts were made with charcoal. Coal was discoveredin India in 1774 and coalmining started in the Asansol-Ranigunj area around 1820-1830.

In the first decade of the last century Kulti also producedsteel utilizing open hearth furnaces. However, the effortsdid not survive the competition from imported steel.

Therefore, although Kulti was the first plant in the countryto produce both iron and steel, credit is normally given toTISCO because it did it on a continuous basis. World steelproduction was around 5 million tonnes (against morethan a billion tonnes at present.)


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Operating an industrial unit in those days was extremelydifficult. The plant at Kulti changed hands many times.For some time, it was operated under the Public WorksDepartment of the Government. That was in an age when

even the concept of public sector had not germinated.Somewhere in the last decade of the nineteenth centurySir Rajendranath Mookerjee and Sir Acquin Martin, whohad together founded Martin & Co. bought over the plantat Kulti and helped it to survive.

They were also responsible for opening the first iron oremine at Pansiraburu in Singhbhum district in what was

then Bengal and now Jharkhand, in 1901. The discoveryof iron ore effectively laid the foundation for the iron andsteel industry in India. TISCO started operations in 1908.

Burnpur gets goingThe possibility of a second steel plant in the country wasopened up with disruption of supplies of iron and steelfrom Europe during the First World War. Burn & Co.

promoted The Indian Iron & Steel Co. Ltd. in 1918.G.H.Fairhurst is credited with having founded the plant atBurnpur. The blast furnaces were not of the open top typeas at Kulti and coke oven batteries were also built toprovide coke for the furnaces. However, bullock cartscontinued to be used for transportation. The first blastfurnace went into operation in 1922 and the second in1924.

Amongst those associated with the plant at Burnpur wereSir Rajen Mookerjee and T.Leslie Martin (Sir Acquins son).Sir Biren Mookerjee, Sir Rajens son, who had a role in thegrowth and development of the plant joined a few years


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later. Bengal Iron was merged with IISCO in 1936. Inthose days, the plants used to export pig iron to Japan.Steel Corporation of Bengal (SCOB) set up the steel plantat Burnpur adjacent to the iron making facilities of IISCO

in 1939. The two were merged and operated under themanaging agency of Martin Burn in the early fifties. Theplant was expanded to an annual capacity of 1 milliontonnes and it achieved rated capacity in the early sixties.IISCO was a highly profit making concern and its shareswere quoted on London Stock Exchange. Within thecountry, it had the reputation of being the best place forinvestment even by widows.Investments were considered

safe and sound.

IISCO owed its success largely to the efficient topmanagement team, who steered the company mosteffectively.Over the years, that team includedH.V.Peeling, Ashok Chaterjee, John McCracken,F.W.A.Lahmeyer and N.R.Dutt. They were managementlegends, long departed but still remembered for their

contribution to the growth and development of the steelplant and life in the township. They took IISCO to greatheights of glory. With high production and profitability,life in the townships was enriched. A new township wasbuilt at Chhotodighari. It was a model township in thosedays, with numbered roads lined with flowering trees, aneffective sewerage system and underground electricconnections.

Kulti Works pioneered thethe production of spun pipes in1945.Thereafter, the foundries at Kulti were expandedand the iron making facilities were dismantled.

Delay in modernisation


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Iron and steel technology advanced in leaps and boundssince the Second World War, along with massive growthin production globally. The technological leap forward leftthe plant the plant at Burnpur in shambles. Rising cost of

production made the once profit making organisation alossmaking unit. Coupled with militant labour trouble inthe sixties, IISCO faced a situation of near collapse in theearly seventies. The management of IISCO was takenover by the government on 14 July 1972. SubsequentlyIISCO was nationalised and made a wholly ownedsubsidiary of SAIL (Steel Authority of India Ltd.). At thetime of government-take over IISCO was the third largest

private sector company (after TISCO and Telco) in India.There were two major obstacles to modernisation ofIISCO. The first was the non-availability of funds for thegigantic task. Around Rs. 5,000 crores were required forthe modernisation programme. The second obstacle wasthe massive reduction in manpower.In the seventies, SAIL was a loss-making organisation,entirely dependent on budgetary support of the

government. The situation was reversed afterV.Krishnamurthy took over as chairman of SAIL. He madeSAIL a profit-making organisation and from the eightiesSAIL has functioned without any budgetary support of thegovernment. It has stood on its own feet. Krishnamurthyalso initiated the programme for the modernisation of thesteel plants at Durgapur, Rourkela and Burnpur. While theprogramme at Durgapur and Rourkela succeeded and are

bearing fruit, the modernisation of Burnpur was struckdown by political and trade union intervention.

During the days of private management, IISCO hadmanpower of 18,000 for a production of 1 million tonnesof steel at Burnpur. In spite of decline in production,


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considerable additional manpower was added in the lastdays of private management. With government takeover,the manpower swelled to 28,000. The consortium of

Japanese steel companies, which was planning for the

modernisation of IISCO proposed manpower of 14,200 fora production of 2.1 million tonnes. That became a sourceof bitterness although officially everybody accepted theproposal formally. In todays context, the manpowerrequirement for a steel plant has gone down even further.Globally, the thumb rule is 1,000workers for a productionof 1 million tonnes. In South Korea, POSCO produces 28million tonnes with around 10,000 workers. With the

resignation of Rajiv Gandhis government in 1989, theproposal for the modernisation of IISCO fell through.

Thereafter various proposals were mooted, includingprivatisation of IISCO, but nothing matured. Even with aclean balance sheet, after all loans were written off, therewere no takers for IISCO against global tenders. IISCOwas virtually in the dock facing the threat of being closeddown. After earning profits for 14 years in a row, SAIL was

once again in the red when the entire steel industry wasin the doldrums from the late nineties. Things startedlooking up from 2003-04 and SAIL was back in profits. Ithas taken up a massive programme ofexpansion/modernisation with an investment of aroundRs. 25,000 crores encompassing all its plants, after it hascompleted its modernisation programme costing Rs.15,000 crores.

Trade union activityThe first trade union was established in IISCO in 1943.Prof. Abdul Bari was associated with it for some time.Gopeswar, who later became national president of theIndian National Trade Union Congress (INTUC), operated


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at Burnpur and was all along been associated with IISCO.He has represented the workers on the boards of manycompanies. The famous strike in 1953 led to theformation of Action Committee, which later emerged as a

wing of the All India Trade Union Congress (AITUC). Sinceits split, the Centre of Indian Trade Unions (CITU) playeda big role in IISCO affairs, their leaders beingChandrasekhar Mukherjee and Bamapada Mukherjee.Amongst other leaders who need a mention are TaherHussein and Nitish Sett of AITUC.

For many years, the trade unions and IISCO Officers

Association have worked in unison under the banner ofthe Save IISCO Committee. On the positive side, the tradeunions were responsible for the increase in wages andimprovements in working conditions of the workers.However, it is yet to be seen as to what role they play ina completely changed scenario. Steel workers areamongst the best paid in the organised sector of Indianindustry.[citation needed] The IISCO workforce is

particularly reputed for its strong sense of belonging.[citation needed] Many of them are second or even thirdgeneration employees.

Modernisation inauguratedPrime Minister Manmohan Singh inaugurated the work for a Rs. 9,600crore modernization programme at Burnpur on 24 December 2006. It isthe largest investment in West Bengal in the last ten years.The programme envisages the installation of state-of-the-artenvironment-friendly and energy-efficient steel making technology. Itwill help ISP multiply its crude steel production capacity from the

present 0.5 million tonnes to 2.5 million tonnes by the year 2010.Among the new facilities that will be installed as part of ISPs expansionare a large-volume blast furnace, coke oven battery, two sinter plants,


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three converters with continuous billet and beam blank/bloom casters,heavy section mill of 0.6 million tone capacity and wire rod & bar millof 1.2 million tonne capacity. Besides increase in steel production, thenew facilities will provide the plant with a competitive edge in terms of

manpower productivity and other techno-economic parameters like blastfurnace productivity, coke rate, energy consumption, etc.

However the expansion work has been delayed due to revision incontract and the revised date as per the consultant MECON is June 2011.The expansion work was slow initially but with the coming of the newMT(T) 2010 batch the work has gathered momentum.This young batchof 28 MT(T)s joined on 14th June 2010 and have been at the forefront of

puting this already delayed project back on track.

History & Background

The PrecursorSAIL traces its origin to the formative years of an emerging nation -India. After independence the builders of modern India worked with avision - to lay the infrastructure for rapid industrialisaton of the country.The steel sector was to propel the economic growth. Hindustan SteelPrivate Limited was set up on January 19, 1954.

Expanding Horizon (1959-1973)

Hindustan Steel (HSL) was initially designed to manage only one plantthat was coming up at Rourkela. For Bhilai and Durgapur Steel Plants,the preliminary work was done by the Iron and Steel Ministry. FromApril 1957, the supervision and control of these two steel plants werealso transferred to Hindustan Steel. The registered office was originally


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in New Delhi. It moved to Calcutta in July 1956, and ultimately toRanchi in December 1959.

The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by

the end of December 1961. The 1 MT phase of Durgapur Steel Plant wascompleted in January 1962 after commissioning of the Wheel and Axle

plant. The crude steel production of HSL went up from .158 MT (1959-60) to 1.6 MT. A new steel company, Bokaro Steel Limited, wasincorporated in January 1964 to construct and operate the steel plant atBokaro.The second phase of Bhilai Steel Plant was completed inSeptember 1967 after commissioning of the Wire Rod Mill. The last unitof the 1.8 MT phase of Rourkela - the Tandem Mill - was commissionedin February 1968, and the 1.6 MT stage of Durgapur Steel Plant wascompleted in August 1969 after commissioning of the Furnace in SMS.

Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT atRourkela and 1.6 MT at Durgapur, the total crude steel productioncapacity of HSL was raised to 3.7 MT in 1968-69 and subsequently to4MT in 1972-73.

Holding Company

The Ministry of Steel and Mines drafted a policy statement to evolve anew model for managing industry. The policy statement was presentedto the Parliament on December 2, 1972. On this basis the concept ofcreating a holding company to manage inputs and outputs under oneumbrella was mooted. This led to the formation of Steel Authority ofIndia Ltd. The company, incorporated on January 24, 1973 with anauthorized capital of Rs. 2000 crore, was made responsible for managingfive integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and

Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAILwas restructured as an operating company.

Since its inception, SAIL has been instrumental in laying a soundinfrastructure for the industrial development of the country. Besides, ithas immensely contributed to the development of technical and


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managerial expertise. It has triggered the secondary and tertiary wavesof economic growth by continuously providing the inputs for theconsuming industry.


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Chaireman Message

Mr Chandra Shekhar

Verma took charge of theoffice of Chairman, SAILon 11 June 2010. Prior tothis assignment, MrVerma was Director(Finance) of BharatHeavy Electricals Limited(BHEL), India's largestengineering and

manufacturing enterprisein the energy-related/infrastructuresector. His prudentfinancial management andstrategic deployment ofscarce resources hadstrengthened the

competitive position ofBHEL.

As Director/Finance ofBHEL since September2005, Mr Verma also hadthe distinction ofspearheading the jointventure initiatives of the

company with variousstate GENCOs. Hisefforts resulted in thesigning of four suchagreements with Tamil

Nadu, Karnataka, Madhya


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Pradesh and Maharashtrathat would leverage thesale of 7 supercriticalthermal power plants of

BHEL. He also played akey role in the finalisationof various technologyagreements of BHEL withAlstom, Siemens, GE andSheffield Forgemasters.

Spanning nearly 29 years, Mr Verma's career profile alsocovers stints as Director (Finance) of ITI Ltd., as GroupGeneral Manager of Indian Railway FinanceCorporation, and as General Manager of Delhi StockExchange (DSE), besides experience of working in aFinancial Institution for about nine years.

Fellow Member of the Institute of Company Secretariesof India (FCS) and of the Institute of Cost & WorksAccountants of India (FICWA), Mr Verma is a

Commerce post-graduate with a Master's degree inBusiness Administration and Bachelor's degree in Law &Legislatures. He has received many awards during hiscareer, including 'Best CFO Award' of CNBC-TV 18 inthe infrastructure sector for the year 2008-09 and 'TopRankers Excellence Award for Best Professional' for theyear 2008. During his tenure in BHEL, the companyreceived the first prize in 'ICWAI National Award forExcellence in Best Cost Management Practices'.

SAIL, which has been recently accorded the status of'Maharatna' by the Government of India, is currently

preparing for divestment of 10% of its equity in twotranches and is implementing a Rs. 60,000-croremodernisation & expansion plan in its plants and mines.With Mr Verma at its helm and his vast knowledge and


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experience in support, SAIL is poised to attain greaterheights.

SAIL - Into the Future


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Modernisation & Expansion

SAIL, is in the process of modernizing and expanding its production

units, raw material resources and other facilities to maintain its dominantposition in the Indian steel market. The objective is to achieve aproduction capacity of 26.2 MTPA of Hot Metal from the base levelproduction of 14.6 MTPA (2006-07 Actual).Orders for all major packages of ISP & SSP and part packages of BSL,BSP, RSP & DSP Expansion have been placed and these packages are invarious stages of implementation

A new unit coming up ISP

Objective of Expansion Plan

100% production of steel through Basic Oxygen Furnace (BOF)route

100% processing of steel through continuous casting Value addition by reduction of semi-finished steel Auxiliary fuel injection system in all the Blast Furnaces State-of-art process control computerization / automation State-of-art online testing and quality control Energy saving schemes

Secondary refining Adherence to environment norms


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Jindal Steel


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Jindal Steel is amongst the largest corporate groups in India. JindalGroup is presently a US $5 billion conglomerate and ranks fourthamongst the top Indian Business Houses in terms of assets. Jindal Steelis one of the largest steel producers in India with 12 plants in India and 2

in USA.

O.P. Jindal is the founder of Jindal Group. He started by trading in steelpipes in Nalwa, a village in the present-day Haryana. In 1952, O.P.Jindal set up the group's first factory at Liluah, near Calcutta for themanufacturing of steel pipes, bends and sockets. Soon thereafter, he setup a similar manufacturing unit at Hisar. In the early 1960s Jindal Steelachieved a breakthrough when it developed India's first 100%indigenous pipe mill at Hisar. In 1970, O.P. Jindal established JindalStrips Limited and set up a mini steel plant at Hisar to manufacture coilsand plates through the electric and furnace route. Since then, Jindal Steelhas not looked back and has gone from strength to strength. Today, thegroup has developed into a multi-faceted organization with revenues inexcess of US $5 billion.Companies of Jindal Group

Jindal Stainless Ltd.: Jindal Stainless is the largest integrated stainless

steel producer in India and the flagship company of the Jindal Group. Itis an ISO: 9001 & ISO: 14001 company. Jindal Stainless Ltd. has plantsat Hisar and Vizag and is setting up a Greenfield integrated StainlessSteel project in Orissa with capacity of 1.6 million tones per annum.Jindal's plant at Hisar is India's only composite stainless steel plant forthe manufacture of Stainless Steel Slabs, Blooms, Hot rolled and ColdRolled Coils, 60% of which are exported worldwide. At Vizag, Jindalhas a Ferro Alloy Plant with an installed capacity of 40,000 metric tones

per annum.

Jindal Steel & Power Ltd: JSPL is one of the leaders in SteelManufacturing and Power Generation in India. JSPL is the largest

private sector investor in the State of Chhattisgarh with a totalinvestment commitment of more than Rs. 10,000 crores. It is also settingup a 6 million tonne steel plant in Orissa with an investment of Rs.


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13,500 crores and a 6 million tonne steel plant in Jharkhand with aninvestment of Rs. 15,000 crores. Jindal Power Limited, wholly ownedsubsidiary of JSPL, is setting up a 1000 MW O P Jindal Super ThermalPower Plant at Raigarh, with an investment of over Rs. 4500 crores.

JSPL has also ventured into exploration and mining of high valueminerals and metals, like diamond, precious stones, gold, platinumgroup of minerals, base metals, tar sands etc.

JSW Steel Limited: JSW Steel Ltd is a fully integrated steel plant havingunits across Karnataka and Maharashtra producing from pellets to colourcoated steel. JSW was founded in1982, when the Jindal Group acquiredPiramal Steel Ltd which operated a mini steel mill at Tarapur inMaharashtra. The Jindals, renamed it as Jindal Iron and Steel Co Ltd(JISCO) now known as JSW Steel Limited (Downstream). In 1994, toachieve the vision of moving up the value chain and building a strong,resilient company, JISCO promoted Jindal Vijayanagar Steel Ltd (JVSL)now known as JSW Steel Limited (Upstream).


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Board of Directors

Strong leadership forms the nucleus of JSPL and drives all its endeavors. Hailing from diverse backgrounds,

armed with vast experience and knowledge, the companys core team takes strategic decisions, focusing on

the development of the organization, people and the nation as a whole.

Smt. Savitri Jindal

Chairperson

Mr. Naveen Jindal

Executive Vice Chairman

& Managing Director

Mr. Ratan Jindal

Director

Mr. Vikrant Gujral

Group Vice Chairman &

Head Global Ventures

Mr. Anand Goel

Jt. Managing Director

Mr. Sushil Maroo

Director

Mr. A. K. Mukherji

Wholetime Director


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Mr. S. Ananthakrishnan

Nominee Director

- IDBI Bank Ltd.

Mr. R. V. Shahi

Director, Independent

Mr. Arun K. Purwar


Mr. Arun Kumar

Additional Director,

Independent

Mr. Haigreve Khaitan


Mr. Hardip Singh Wirk


Mr. Rahul Mehra



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Business overview

We started as a steel manufacturing company, enhanced our position as amajor steel producer and diversified into various other sectors such asMining, Power Generation & Trading, Petroleum, Cement andInfrastructure.The companies managing the businesses are:Jindal Steel & Power LimitedJindal Power LimitedJindal Petroleum Limited

Jindal Steel BoliviaJindal Cement Limited

JSPL has set its foot in the international arena by acquiring thedevelopment rights of 20 billion tonne of Iron Ore in Bolivia. Thecompany plans to invest US$ 2.1 billion (Rs. 10,500 crore) over the

coming years in Bolivia by setting up a 10 MTPA capacity Iron Orepelletisation plant, a 6 MTPA capacity DRI plant, a 1.7 MTPA capacitysteel plantand a 450 MW power plant besides mining. The companyrecently acquired Shadeed Iron & Steel Co. LLC (SISCO) a companyincorporated under the laws of the Sultanate of Oman. The project isunder commissioning and is expected to commence commercialoperations in the first quarter of FY 2011/12.

With coal reserves in Indonesia and South Africa, the search for mines

continues from Mozambique to Madagascar. The company has alsoforayed into exploration and mining of high value minerals likediamonds, etc. in states like Chhattisgarh, Jharkhand and the DemocraticRepublic of Congo in Africa.

JSPL endeavors to strengthen Indias industrial base by aiding
http://www.jindalsteelpower.com/about-us/corporate-profile.aspxhttp://www.jindalpower.com/http://www.jindalsteelpower.com/business/jindal-petroleum-ltd.aspxhttp://www.jindalsteelpower.com/business/jindal-steel-bolivia.aspxhttp://www.jindalsteelpower.com/business/jindal-cement-ltd.aspxhttp://www.jindalsteelpower.com/about-us/corporate-profile.aspxhttp://www.jindalpower.com/http://www.jindalsteelpower.com/business/jindal-petroleum-ltd.aspxhttp://www.jindalsteelpower.com/business/jindal-steel-bolivia.aspxhttp://www.jindalsteelpower.com/business/jindal-cement-ltd.aspx


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infrastructural development, through sustainable developmentapproaches and inclusive growth. The company deploys its resources tothe extent it can reasonably afford to improve infrastructure, education,health, water, sanitation, environment etc. in the area it operates.

As JSPL contributes to Indias growth, it has also set in place a globalexpansion plan in order to become one of the most prestigious anddynamic business groups of the country. The future is studded withchallenges and JSPL is taking them on with vigor and courage.


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Philosophy

Our Vision

To be a globally admired organization thatenhances the quality of life of all stakeholdersthrough sustainable industrial and businessdevelopment.Our MissionWe aspire to achieve business excellencethrough:

The spirit of entrepreneurship and

innovation Optimum utilization of resources Sustainable environment friendly

procedures and practices The highest ethics and standards Hiring, developing and retaining the best

people Maximising returns to stakeholders

Positive impact on the communities wetouch

Our Core Values Passion for People Business Excellence Integrity, Ownership & Sense of Belonging


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Sustainable Development

Rails

Giving impetus to the significant rail sector, JSPL has pioneered the

manufacturing of 121 metre long track rails in the Indian sub-continent.The worlds longest track rails are a testimony of JSPLs manufacturingcapabilities where continuous innovation is a practice rather than anexception.What differentiates JSPLs 121 m long rails from the others is that there isa drastic reduction in the welded joints, providing enhanced safety, costreduction and travel comfort. Our products are subjected to stringentquality norms and can, therefore, match all international standards.JSPL rails are rolled in different sections ranging from IRS-52, UIC 54 &UIC 60 and IRS T-12/2009 conforming to Indian Railways specificationsas well as various other international railway specifications.A range of certifications such as BSI-London for Quality (BS: EN9002:2000) and Environmental Management System (BS EN14001: 1996)& RDSO (Indian Railways) testifies to the quality and performance of thetrack rails. Beside our internal quality assurance mechanism, we alsoensure that a comprehensive third-party inspection is conducted before thefinal dispatch of the products to the customers.

Parallel Flange Sections


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JSPL pioneered the production of medium and large size HotRolled Parallel Flange Beams and Column Sections (H-Beams) in India. The beams are cost-effective and providedesign flexibility.

Manufactured as per Indian & International standards,these sections are superior in terms of strength, efficiency,higher axial and bending load bearing capacity, workabilityand economy vis--vis outdated tapered flange beams.

They are extensively used in construction of multi-storiedbuildings, bridges, utility buildings, car parking lots,refineries, airports, flyovers, metro rail projects, cement,steel plants and industrial sheds and structures, material

handling systems, shopping malls, power plants andstadiums.

JSPL collaborated with JFE Engineering Corporation, Japan(formerly known as NKK Corp.), to introduce this innovativeproduct in India. JSPL leads technical innovation andadvancement by offering H-Beams that are unmatched inquality, performance and cost effectiveness.Manufactured through the Universal Rolling method, these

beams have standard nominal depth, with different flangeand web thicknessess. This helps customers to choose frommore options in terms of unit weights and sectionalproperties. In fact, JSPL's beams are the most sought afterby structural engineers, architects and constructioncompanies globally.

JSPL has a state-of-the-art, integrated manufacturing plantat Raigarh, Chhattisgarh, where H-beam sections up to 900

mm are manufactured on a regular basis. Equipped withmodern machinery, the plant boasts of world-classproduction facilities with efficient product rollouts. The H-beam plant machinery includes: reheating furnace, primary& secondary de-scaler, universal tandem mill, cooling beds,straightening machines, testing and finishing facilities


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including online ultrasonic and eddy current testingfacilities for rails.

Plates & Coils

JSPL is equipped with India's first 'one of a kind' state-of-the-art plate mill that produces plates and coils of 3.5 and 3metres width, respectively, for the first time in the privatesector.

JSPL epitomizes its performance-oriented service by

producing plates ranging from 7-120 mm in thickness &widths of 1500 -3500 mm and coils varying in thickness of 7-25 mm and widths of 1500 - 2500 mm. The products are ofpremium quality, owing to its sound steel refiningproperties. The total production capacity of the plant is 1MTPA. JSPL adheres to stringent international standards and


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the steel grades are manufactured under variousspecifications like EN, DNV, BS, ASTM, JIS, LRS, ABS, etc.Initiating production in Jan 2007, the plate mill acquired ISO9001:2000 and ISO 14001:2004 certifications. It has been

awarded CE, ADW-2000, LRS, ABS, & DNV certifications forshipbuilding. GL & NK certifications are under process forservicing the requirements of the shipbuilding industry.

The hot rolled plates of the company aremanufactured in the upgraded stecklemill that confirms to international qualitystandards and offers value added serviceto the customers. Steel refining and

rolling processes adopted by thecompany are considered exclusive.Our plate mill is equipped with walking beam type ofreheating furnace. The slabs are re-heated at a very hightemperature of 1,250 degrees celsius and then rolled in a 2hi-reversing type roughing mill and a 4 hi-reversing typefinishing mill. To ensure excellent surface quality, highpressure de-scalers are provided at the entry and exit

points.

An auto level 2 width and thickness controlling systemcoupled with heavy leveller assures close dimensionaltolerances and an increased level of flatness control. Rightfrom the slab charging and plate production to the

conclusive stage, fully equipped inspection facilities are inplace.

Semi-Finished Products


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JSPL has a capacity to produce about

three million tonne per annum of semiswhich are primarily used for captive usein JSPLs 0.75 million tonne per annumcapacity Rail & Universal Beam Mill and1.0 million tonne per annum capacityPlate & Stackle Mill.Semi-finished steel production (casting) facilities atJSPL

Four strand Bloom-cum-Beam, Blank-cum-Round caster (1MTPA capacity) isone-of-its-kind in India. It can cast beamblanks in size 480x420x120 mm, 355x280x90mm for rollingof structural sections, blooms in sizes 285x390 mm,280x320 mm, or 285x390 mm for rolling of structuralsections and rails and rounds in 140, 160, 200, 220, 255,280, 305 & 355 mm diametre for production of seamlesspipes. While cast beam, blanks and blooms are for both

captive use and sale, cast rounds are produced for sale.Six strand billet-cum-round caster (0.75 MTPA capacity.) Itcan cast billets in sizes 130 mmx130 mm, 150x150 mm and200X200 mm for rolling of structural products or rounds indiameter 140, 160, 180 and 200 mm for production ofseamless pipes, all for sale.Single strand Slab caster (1 MTPA capacity.) It can castslabs in thickness of 215, 250, and 280 mm & in widthsranging from 1500 mm to 2600 mm, for captive use in

JSPL's plate mill or for commercial sale.Semi-finished products from JSPL can be delivered in a widerange of carbon steel and alloy steel grades with ultra lowgas and sulphur contents and come assured with highinternal soundness and dimensional uniformity.


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Sponge iron

JSPL has the world's largestcoal-based sponge ironmanufacturing facility andstands out as the market leader in coal-based sponge iron industry withinIndia. Efficient backward integration has rendered JSPL as the only sponge

iron manufacturer in the country, with its own captive raw materialresources and power generation capacity helping the company to monitor

both price and quality of its products.Commissioned in 1991, the Raigarh plant has a manufacturing capacity of1.37 MTPA and metallic iron content of more than 81%. The plant usesDirect Reduced Iron Process (DRI) method of production and utilizes 10indigenously developed rotary kilns (6 kilns of 300 TPD & 4 kilns of 500TPD).

Specifications

Characteristic Requirement

% Non-

magnetic:1.0 Max.

% Metallic Fe :81 Min.

% Total Fe :91 Min.

Metallisation :88 Min.

%Phosphorou

s:0.07 Max.

% Sulphur :0.07%

% Carbon :0.3 Max.

% SiO2+Al2O3

:5 Max.

Size :A-grade lumps 3-20 mm(-3 mm 5%

Max.)

A-grade fines 0-6 mm (+6 mm 5%

Max.)


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Date of Establishment 1907Revenue 5968.73 ( USD in Millions )Market Cap 554320.4020224 ( Rs. in Millions )Corporate Address Bombay House,24 Homi Mody Street Fort,

Mumbai-400001, Maharashtrawww.tatasteel.com

Management Details Chairperson - Ratan N TataMD - H M NerurkarDirectors - A Anjeneyan, Andrew Robb, AnthonyHayward, B Muthuraman, H M Nerurkar, IshaatHussain, J C Bham, Jacobus Schraven, JamesLeng, Jamshed J Irani, Kirby Adams, Nusli NWadia, Ratan N Tata, S M Palia, SubodhBhargava, Suresh Krishna

Business Operation Steel/Sponge Iron/Pig IronBackground Established in 1907, Tata Steel, the flagshipcompany of the Tata group is the first integratedsteel plant in Asia and is now the world`s secondmost geographically diversified steel producerand a Fortune 500 Company. Backed by 100glorious years of experience in steel making,Tata Steel is the worlds 6th largest steelcompany with an existing annual crude steelproduction capacity of 30 Million T

Financials Total Income - Rs. 263098.9 Million ( year

ending Mar 2010)Net Profit - Rs. 50468 Million ( year endingMar 2010)

Company Secretary A AnjeneyanBankersAuditors Deloittee Haskins & Sell

Established in 1907, Tata Steel, the flagship company of the Tata group isthe first integrated steel plant in Asia and is now the world`s second mostgeographically diversified steel producer and a Fortune 500 Company.


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Backed by 100 glorious years of experience in steel making, Tata Steel isthe worlds 6th largest steel company with an existing annual crude steel

production capacity of 30 Million Tonnes Per Annum (MTPA). Tata Steelhas a balanced global presence in over 50 developed European and fast

growing Asian markets, with manufacturing units in 26 countries.It was the vision of the founder; Jamsetji Nusserwanji Tata, that onFebruary 27, 1908, the first stake was driven into the soil of Sakchi. Hisvision helped Tata Steel overcome several periods of adversity and strive toimprove against all odds.Tata Steel`s Jamshedpur (India) Works has a crude steel productioncapacity of 6.8 MTPA which is slated to increase to 10 MTPA by 2010. TheCompany also has proposed three Greenfield steel projects in the states ofJharkhand, Orissa and Chhattisgarh in India with additional capacity of 23MTPA and a Greenfield project in Vietnam.Through investments in Corus, Millennium Steel (renamed Tata SteelThailand) and NatSteel Holdings, Singapore, Tata Steel has created amanufacturing and marketing network in Europe, South East Asia and the

pacific-rim countries. Corus, which manufactured over 20 MTPA of steel in2008, has operations in the UK, the Netherlands, Germany, France, Norwayand Belgium.Tata Steel Thailand is the largest producer of long steel products in

Thailand, with a manufacturing capacity of 1.7 MTPA. Tata Steel hasproposed a 0.5 MTPA mini blast furnace project in Thailand. NatSteelHoldings produces about 2 MTPA of steel products across its regionaloperations in seven countries.Tata Steel, through its joint venture with Tata BlueScope Steel Limited, hasalso entered the steel building and construction applications market.The iron ore mines and collieries in India give the Company a distinctadvantage in raw material sourcing. Tata Steel is also striving towards rawmaterials security through joint ventures in Thailand, Australia,

Mozambique, Ivory Coast (West Africa) and Oman. Tata Steel has signedan agreement with Steel Authority of India Limited to establish a 50:50

joint venture company for coal mining in India. Also, Tata Steel has bought19.9% stake in New Millennium Capital Corporation, Canada for iron oremining.Exploration of opportunities in titanium dioxide business in Tamil Nadu,


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ferro-chrome plant in South Africa and setting up of a deep-sea port incoastal Orissa are integral to the Growth and Globalisation objective of TataSteel.Tata Steel India is the first integrated steel company in the world, outside

Japan, to be awarded the Deming Application Prize 2008 for excellence inTotal Quality Management.Business divisions of the company:Bearings Division : Manufactures ball bearings, double row self-aligning

bearings, magneto bearings, clutch release bearings and tapered rollerbearings for two wheelers, fans, water pumps, etc.Ferro Alloys and Minerals Division : Operates chrome mines and hasunits for making ferro chrome and ferro manganese. It is one of the largest

players in the global ferro chrome market.Agrico Division : Tata Agrico is the first organised manufacturer in Indiaof hand tools and implements for application in agriculture.Tata Growth Shop (TGS) : Has designed, developed, manufactured,erected and commissioned thousands of tonnes of equipment ranging fromoverhead cranes to high precision components, including a rocket launch

pad for the Indian Space and Research Organisation.Tubes Division : The biggest steel tube manufacturer with the largestmarket share in India, it aspires to strengthen its market presence by

expanding and modernising its commercial and precision tubemanufacturing capacity.Wire Division : A pioneer in the manufacture of steel wires in India, it

produces coated and uncoated wires, branded as Tata Wiron. The divisionalso operates a wholly owned subsidiary in Sri Lanka.Joint ventures and Associates:Corus- Europes second largest steel maker with operations in the UK andmainland EuropeTinplate Company of India Limited (TCIL)

Tayo Rolls LimitedTata Ryerson Limited (TRYL)Tata Refractories Limited (TRL)Tata Sponge Iron Limited (TSIL)Tata MetaliksTata Pigments Limited


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Jamshedpur Injection Powder Limited (Jamipol)TM International Logistics Limited (TMILL)mjunction services limitedTRF Limited

Jamshedpur Utility and Service Company Limited (JUSCO)The Indian Steel and Wire Products Limited (ISWP)Tata BlueScope Steel LimitedDhamra Port Company, OrissaHooghly Met Coke & Power CompanyLanka Special Steel LimitedSila Eastern Company Limited

NatSteel Holdings (NSH)Tata Steel ThailandTata Steel KZN- South AfricaTata NYK : A joint venture with Nippon Yusen Kabushiki KaishaAchievements/ recognition:Tata Steel India awarded the Deming Application Prize 2008 for excellencein Total Quality Management. It is the first integrated steel company in theworld, outside Japan to get this award.World Steel Dynamics has ranked Tata Steel as the world's best steel maker(for two consecutive years) in its annual listing in February 2006.

Tata Steel has been conferred the Prime Minister of India's Trophy for theBest Integrated Steel Plant five times.It has been awarded Asia's MostAdmired Knowledge Enterprise award five times in 2003, 2004, 2006, 2007and 2008.Conferred the prestigious Global Business Coalition Award for BusinessExcellence in the Community in recognition of its pioneering work in thefield of HIV/ AIDS awareness.Tata Steel works has been conferred the prestigious social accountability(SA) 8000 certification by social. Accountability international (SAI), USA.

It is the first steel company in the world to receive this certificate.Corporate Sustainability Report of Tata Steel hailed by United Nation'sEnvironment Programme (UNEP) and Standard and poor as strongest,submitted by any corporate house from emerging economies.Best governed company Award 2006 for setting high standards ingovernance practices.


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Tata Steel won 'Award for Corporate Social Responsibility in Public health'by US- Indian Business Council (USIBC), Population ServicesInternational (PSI) and the center for Strategic and International Studies(CSIS) in 2007.

S.No Name Designation

1Ratan N Tata Chairman

3H M Nerurkar Managing Director

2A Anjeneyan Company Secretary

4Nusli N Wadia Director

5 Ishaat Hussain Director

6Subodh Bhargava Director

7Jacobus Schraven Director

8Jamshed J Irani Director

9Andrew Robb Director

10S M Palia Director

11Suresh Krishna Director

12B Muthuraman Vice Chairman


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CompanySales

(Rs.Million)Current

PriceChange (%) P/E Ratio

MarketCap.

(Rs.Million)

52-WeekHigh/Low

SAIL412302.70 205.50 -3.54 13.33 879981.84 259/155

Jindal Steel & Power73675.90 689.00 -0.88 36.30 649183.79 755/550

Tata Steel250219.80 613.90 -0.08 9.50 554320.40 737/434

JSW Steel182024.80 1292.95 1.19 13.81 279884.63 1400/652

Essar Steel106195.50 51.80 0.00 262.99 59042.20 54/52

Monnet Ispat15487.26 636.20 0.52 11.92 33074.10 655/343

Ispat Inds81319.80 20.65 0.49 0.00 25121.19 25/16

JSL Stainless57565.49 121.20 -0.29 5.88 22557.51 136/88

Electrosteel Steels0.00 10.85 -0.91 0.00 22278.16 12/9

Jai Balaji Inds19143.85 315.50 -3.66 46.32 20888.44 328/178

Uttam Galva 44956.60 159.10 1.50 18.65 19164.27 172/97

Prakash Inds.15676.57 151.35 -0.56 6.83 18947.15 244/130

Adhunik Metaliks12585.90 110.25 2.70 20.23 13257.68 137/86

OCL Iron and Steel1911.88 79.90 0.19 617.56 10697.92 84/19

Sarda Energy & Minls5228.16 276.30 1.10 13.11 9304.53 341/154

Orissa Sponge 1888.32 319.55 0.39 0.00 8627.85 366/271

Surana Inds9450.18 305.05 0.31 23.70 8282.11 326/144

Pennar Industries7979.60 49.25 -1.40 10.03 6095.10 57/23

Tata Sponge5200.14 390.75 0.93 6.33 5962.11 415/215


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Godawari Power7764.30 209.50 -0.26 11.40 5896.06 320/126

Sujana Metal19298.57 29.85 0.17 14.51 5851.26 40/17

Kalyani Steel10581.18 123.25 -1.20 8.31 5445.72 156/52

Lloyds Metals5678.94 48.10 -0.82 49.86 5397.63 75/25

Mukand19629.42 71.05 -0.07 8.26 5198.41 87/45

Sunflag Iron & Steel13480.61 31.20 0.65 4.80 5028.12 36/22

Visa Steel11569.42 40.75 0.49 9.92 4460.50 50/32

MSP Steel3887.45 70.55 4.44 10.68 3924.66 74/25

Tata Metaliks10400.12 138.40 0.18 5.81 3493.54 167/88

Surya Roshni17953.09 117.45 -0.09 6.63 3271.56 124/48

Lloyd Steel Inds.28987.21 14.35 -2.18 0.00 3269.04 20/7

Panchmahal Steel2924.35 167.00 4.54 18.84 2927.90 180/62

Lanco Industries6905.80 61.50 0.65 4.03 2429.56 80/38

Gall.Metal4331.16 28.70 -0.35 9.86 2342.08 45/14

MUSCO Ugine Steel10878.80 69.25 0.14 16.21 2246.17 78/37

KIC Metalik4152.25 309.25 -0.24 11.68 2200.75 335/29

Bellary Steels351.22 2.63 0.38 0.00 1916.35 5/2

Sathavahana Ispat3847.79 56.30 -0.62 6.01 1892.11 55/28

Steel Exchange India6969.79 43.75 -0.46 59.76 1446.43 59/28

Gall.Ispat1224.56 52.30 -0.66 0.00 1409.26 87/49

India Steel Works1021.75 5.21 4.20 0.00 1170.40 7/4

Bihar Sponge1799.49 12.56 -1.02 0.00 1144.71 15/9


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Gang.Iron1675.15 84.00 -0.47 56.53 1131.96 100/28

Ankit Metal6288.78 29.10 -0.85 4.18 956.68 34/17

Natl.Stee 22320.96 28.00 0.00 2.95 912.88 33/16

SAL Steels2984.82 9.87 -0.20 49.33 840.32 18/8

Ruchi Strips6688.95 22.00 2.56 22.42 834.41 24/9

Rathi Steel & Power7557.99 26.55 -0.19 5.62 832.80 33/14

Vikash Metal & Power6922.25 16.90 -0.59 16.04 597.04 23/14

Good Luck Steel Tube 4818.63 29.50 0.34 3.65 550.40 41/23

Real Strips2278.07 102.45 -1.25 7.81 516.68 117/38

Modern Steels2896.26 41.75 1.83 7.07 490.52 52/15

Kanishk Steel4368.30 16.50 -5.71 16.06 469.20 29/14

Vard.Ind2838.15 58.65 1.38 7.22 456.74 65/17

South.Ispat

391.02 10.10 0.60 3.15 439.24 49/10

Tulsyan NEC5930.10 84.00 -2.04 4.66 428.75 101/50

Shah Alloys7780.66 20.15 -0.74 0.00 401.89 40/20

Wires & Fabriks625.98 128.85 2.38 10.65 393.80 148/85

Kamdhenu Ispat3689.24 20.55 -1.20 9.54 390.68 28/16

Uni Abex Alloy630.12 190.00 0.21 5.61 374.46 229/100

Steelco Gujarat4609.54 8.70 0.81 6.76 367.31 11/7

Welcast Steels1369.52 525.05 1.19 20.42 335.07 936/380

Bhuwalka Steel4480.82 58.45 0.95 10.22 300.34 77/42


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Marmagoa Steel1507.32 4.41 1.15 0.00 268.76 8/4

Ashir.Stee423.45 19.95 3.10 9.65 249.38 25/10

Bhoruka Steel210.42 16.50 0.00 0.00 219.62 17/16

Shri Bajrang Alloys2000.25 24.20 0.62 10.11 217.80 37/18

Rathi Bars2313.30 13.16 1.46 4.57 211.80 23/8

Anil Sp Steel1001.08 15.55 -1.27 8.79 191.66 24/9

Rishabh Digha Steel31.36 32.60 0.62 10.55 177.76 33/18

Metalman Industries3429.74 13.11 -0.30 20.31

sectorial study on

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