Public Sector

Undertakings in
India

PUBLIC SECTOR UNDERTAKINGS

In India, Public Sector Undertaking (PSU) is a term used for government owned
companies/corporations in which either the State Government or the Union Government or
both own a majority (51% or more) of the equity shares.
The Comptroller and Auditor General of India (CAG) audits government companies. In
respect of government companies, CAG has the power to appoint the Auditor and to direct
the manner in which the Auditor shall audit the company's accounts.
There are currently 277 Central PSUs in India. The first public sector undertaking was the
Railways. Following independence, the sovereign government took up the setting of a strong
national economic infrastructure. The iron and steel industries, power generation, mining
and oil refining activities were developed at this stage.

Evolution of Public Sector Undertakings

Post-Independence, India was grappling with grave socio-economic problems, such as
inequalities in income and low levels of employment, regional imbalances in economic
development and lack of trained manpower, weak industrial base, inadequate investments
and infrastructure facilities, etc.
Hence, the roadmap for Public Sector was developed as an instrument for self-reliant
economic growth. The country adopted the planned economic development polices, which
envisaged the development of PSUs.
Initially, the public sector was confined to core and strategic industries. The second phase
witnessed nationalization of industries, takeover of sick units from the private sector, and
entry of the public sector into new fields like manufacturing consumer goods, consultancy,
contracting and transportation etc.
The Industrial Policy Resolution 1948 outlined the importance of the economy and its
continuous growth in production and equitable distribution. In this process, the policy
envisaged active engagement of the State in development of industries.

The Industrial Policy Resolution 1956 classified industries into three categories with respect
to the role played by the State

The first category (Schedule A) included industries whose future development would
be the exclusive responsibility of the State

The second (Schedule B) category included Enterprises whose initiatives of

development would principally be driven by the State but private participation would
also be allowed to supplement the efforts of the State

And, the third category included the remaining industries, which were left to the
private sector.

In 1969, the government nationalized 14 major banks.

The Industrial Licensing Policy 1970 placed certain restrictions on undertakings belonging to
large industrial houses, defined on the basis of assets exceeding Rs 350 mn.
In 1973, the definition of large industrial houses was adopted in conformity with that of the
Monopolies and Restrictive Trade Practices Act (MRTP) 1969- External website that opens
in a new window and included companies whose assets exceeded Rs 200 mn.
The Statement on Industrial Policy in July 1991 was also significant. It brought in
fundamental changes in the MRTP Act as well. The statement revised the priority of the
public sector.

Classification of Public Sector Undertakings

Public Sector Undertakings (PSUs) can be classified as Public Sector Enterprises (PSEs),
Central Public Sector Enterprises (CPSEs) and Public Sector Banks (PSBs).
The Central Public Sector Enterprises (CPSEs) are also classified into 'strategic' and 'nonstrategic'. Areas of strategic CPSEs are:

Arms & Ammunition and the allied items of defence equipments, defence air-crafts
and warships.

Atomic Energy (except in the areas related to the operation of nuclear power and
applications of radiation and radio-isotopes to agriculture, medicine and non-strategic
industries).

Railways transport.

All other CPSEs are considered as non-strategic.

MAHARATNA/NAVRATNA/MINIRATNA

STATUS

FOR

PUBLIC

SECTOR UNDERTAKINGS
The status of Maharatna, Navratna, Miniratna to CPSEs is conferred by the Department of
Public Enterprises- to various Public Sector Undertakings. These prestigious titles provide
them greater autonomy to compete in the global market.

Maharatna
A Maharatna company should have an average annual turnover of Rs 20,000 crore during the
last three years against Rs 25,000 crore prescribed earlier. The average annual net worth of
the company should be Rs 10,000 crore.
The Maharatna status empowers mega CPSEs to expand their operations and emerge as
global giants. The coveted status empowers the boards of firms to take investment decisions
up to Rs 5,000 crore as against the present Rs 1,000 crore limit without seeking government
approval. The Maharatna firms would now be free to decide on investments up to 15% of
their net worth in a project, limited to an absolute ceiling of Rs 5,000 crore
MAHARATNA CPSEs
1. Bharat Heavy Electricals Limited
2. Coal India Limited
3. GAIL (India) Limited

4. Indian Oil Corporation Limited

5. NTPC Limited
6. Oil & Natural Gas Corporation Limited
7. Steel Authority of India Limited

Navratna
A Navratna company should have Schedule 'A' and Miniratna Category-1 status and at least
three 'Excellent' or 'Very Good' Memorandum of Understanding (MoU) ratings during the
last five years.
The Navratna status empowers PSEs to invest up to Rs. 1000 crore or 15% of their net worth
on a single project without seeking government approval. In a year, these companies can
spend up to 30% of their net worth not exceeding Rs. 1000 cr. They also enjoy the freedom
to enter joint ventures, form alliances and float subsidiaries abroad.
NAVRATNA CPSEs
1. Bharat Electronics Limited
2. Bharat Petroleum Corporation Limited
3. Hindustan Aeronautics Limited
4. Hindustan Petroleum Corporation Limited
5. Mahanagar Telephone Nigam Limited
6. National Aluminium Company Limited
7. NMDC Limited

8. Neyveli Lignite Corporation Limited

9. Oil India Limited
10. Power Finance Corporation Limited
11. Power Grid Corporation of India Limited
12. Rashtriya Ispat Nigam Limited
13. Rural Electrification Corporation Limited
14. Shipping Corporation of India Limited

Miniratna Category
Miniratna Category-I CPSEs
Category Miniratnas can enter into joint ventures, set subsidiary companies and overseas
offices but with certain conditions. This designation applies to PSEs that have made profits
continuously for the last three years or earned a net profit of Rs. 30 crore or more in one of
the three years.
Miniratna Category-II CPSEs
Category II miniratnas have autonomy to incurring the capital expenditure without
government approval up to Rs. 300 crore or up to 50% of their net worth whichever is lower.
MINIRATNA CATEGORY - I CPSEs
1. Airports Authority of India
2. Antrix Corporation Limited
3. Balmer Lawrie & Co. Limited
4. Bharat Dynamics Limited

5. BEML Limited
6. Bharat Sanchar Nigam Limited
7. Bridge & Roof Company (India) Limited
8. Central Warehousing Corporation
9. Central Coalfields Limited
10. Chennai Petroleum Corporation Limited
11. Cochin Shipyard Limited
12. Container Corporation of India Limited
13. Dredging Corporation of India Limited
14. Engineers India Limited
15. Ennore Port Limited
16. Garden Reach Shipbuilders & Engineers Limited
17. Goa Shipyard Limited
18. Hindustan Copper Limited
19. HLL Lifecare Limited
20. Hindustan Newsprint Limited
21. Hindustan Paper Corporation Limited
22. Housing & Urban Development Corporation Limited
23. India Tourism Development Corporation Limited

24. Indian Railway Catering & Tourism Corporation Limited

25. IRCON International Limited
26. KIOCL Limited
27. Mazagaon Dock Limited
28. Mahanadi Coalfields Limited
29. Manganese Ore (India) Limited
30. Mangalore Refinery & Petrochemical Limited
31. Mishra Dhatu Nigam Limited
32. MMTC Limited
33. MSTC Limited
34. National Buildings Construction Corporation Limited
35. National Fertilizers Limited
36. National Seeds Corporation Limited
37. NHPC Limited
38. Northern Coalfields Limited
39. North Eastern Electric Power Corporation Limited
40. Numaligarh Refinery Limited
41. ONGC Videsh Limited
42. Pawan Hans Helicopters Limited

43. Projects & Development India Limited

44. Railtel Corporation of India Limited
45. Rashtriya Chemicals & Fertilizers Limited
46. RITES Limited
47. SJVN Limited
48. Security Printing and Minting Corporation of India Limited
49. South Eastern Coalfields Limited
50. State Trading Corporation of India Limited
51. Telecommunications Consultants India Limited
52. THDC India Limited
53. Western Coalfields Limited
54. WAPCOS Limited
MINIRATNA CATEGORY-II CPSEs
55. Bharat Pumps & Compressors Limited
56. Broadcast Engineering Consultants (I) Limited
57. Central Mine Planning & Design Institute Limited
58. Central Railside Warehouse Company Limited
59. Ed.CIL (India) Limited
60. Engineering Projects (India) Limited

61. FCI Aravali Gypsum & Minerals India Limited

62. Ferro Scrap Nigam Limited
63. HMT (International) Limited
64. HSCC (India) Limited
65. India Trade Promotion Organisation
66. Indian Medicines & Pharmaceuticals Corporation Limited
67. M E C O N Limited
68. Mineral Exploration Corporation Limited
69. National Film Development Corporation Limited
70. National Small Industries Corporation Limited
71. P E C Limited
72. Rajasthan Electronics & Instruments Limited

SECTION 25 COMPANIES
Public Sector Enterprises having objects to promote commerce, art, science, religion, charity
or any other useful purpose and not having any profit motive can be registered as non-profit
company under section 25 of the Companies Act, 1956.
Public Sector Enterprises having objects to promote commerce, art, science, religion, charity
or any other useful purpose and not having any profit motive can be registered as non-profit
company under section 25 of the Companies Act, 1956.

Role of Public Sector Undertakings

Public Sector Undertakings (PSUs) have laid a strong foundation for the industrial
development of the country. The public sector is less concerned with making profits. Hence,
they play a key role in nation building activities, which take the economy in the right
direction.
PSUs provide leverage to the Government (their controlling shareholder) to intervene in the
economy directly or indirectly to achieve the desired socio-economic objectives and
maximize long-term goals.
As agriculture is the backbone of Indian economy, Public Sector Banks (PSBs) play a crucial
role in pushing the agricultural economy on to the progressive pathway and helping develop
rural India. Moreover, PSUs play a substantial role in the rural development by providing
basic infrastructural services to citizens.

ROLE OF PSUs TOWARDS GROWTH OF INDIAN ECONOMY

The public sector has played a vital role in the economic development of India. Since from
Independence, public sector has been assigned a major role to give a kick start to the
economy. To do this, public sector was given the responsibility of the functioning of key
industries such as Iron and steel, Infrastructure etc.

The major role of public sector

enterprises includes:
1. Enhancing Nations Welfare: The main motive of the PSU was to provide goods and
services that add to the welfare of the country as a whole. For example, schools, hospitals,
electricity, etc. These services not only enhance welfare of countrys population but also
enhance the future prospects of economic growth and development.
2. Long Gestation Projects: It was not feasible and economically viable for the private
sectors to invest in the big and wide projects like basic industries and electricity, railways,
roads, etc. This is because these projects need a very huge initial investment and have long
gestation period. Hence, PSU is the most appropriate to invest in these projects.
3. Basic Framework: An important ideology that was inherited in the initial five year plans
was that the public sector should lay down the basic framework for industrialization that
would encourage the private sector at the latter stage of industrialization.

4. Socialist Track: In the initial years after independence, Indian planners and thinkers were
more inclined towards socialist pattern. It was justified on the rational ground that if the
government controls the productive resources and production, then it wont mislead the
countrys economic growth. This was the basic rationale to set up PSUs. These PSUs
produce goods not according to the price signals but according to the social needs and
economic welfare growth of the country.
5. Reduce Inequality of Income and Generate Employment Opportunities: It was assumed
that in order to reduce inequalities of income, eradicate poverty and to raise the standard of
living, government sector should invest in the economy via PSUs.

CONTRIBUTION OF PSUs IN INDIAN GDP

The share of gross value addition in Central Public Sector Enterprises (net value addition +
depreciation) as percent of Gross Domestic Product (at current market price) stood at 5.67 percent in
2011-12 against 5.44 percent in 2010-11.

If, however, the under-recoveries of oil marketing

companies (amounting to Rs. 55041 crore in 2011-12 and 37190 crore in 2010-11) are included, then
the share of gross value addition of all Central Public Sector Enterprises (CPSEs) in GDP goes up to
6.29

percent

in

2011-12

and

6.78

percent

in

2010-11.

As per the Public Enterprises Survey 2011-12, tabled in Parliament recently, CPSEs contribute to the
Central Exchequer by way of dividend payment, interest on government loans and payment of taxes
& duties. There was, however, a significant increase in the total contribution of CPSEs to the Central
Exchequer during the year, which increased from Rs. 1,56,751 crore in 2010-11 to Rs. 1,60,801 crore
in 2011-12. This was, primarily due to increase in contribution towards corporate tax and excise
duty which increased from Rs. 40,324 crore to Rs. 44,358 and Rs. 57,755 crore to Rs. 61,165 crore
respectively in 2010-11 and 2011-12. There was, however, a decline in custom duty, other duties
& taxes and dividend tax during the year as compared to the previous year. There was also a
marginal decline in payment of central sales tax by the CPSEs.

The share of public sector in total employment in organised sector public+ private; reveals
that in transport and communications, electricity, gas, water, and constructions, the share of
public sector is in 95-98%, a total dominant situation.

STEEL AUTHORITY OF INDIA LIMITED -A MAHARATNA

Steel Authority of India Limited the largest steel producer in India, owns and operates eight
plants five integrated steel units and three alloy/special steel &
stainless steel plants. It also owns and operates the second largest
iron ore mines network in the country, for its captive use. Having
a turnover of around Rs 50,000 crore, SAIL has been accorded the
status of Maharatna by the Government of India. It is currently
implementing over Rs 70,000 crore modernization & expansion
plan in its plants and mines to nearly double its crude steel
making capacity.
Mr. Chandra Shekhar Verma, aged 53 years, is Chairman, Steel Authority of India Limited
(SAIL) since June 2010.

STEEL AT A GLANCE

According to World Steel Association, Steel is the most important, innovative, recyclable and
sustainable material of the 21st century.

A brief history of iron and steel production

The production of iron by humans began probably sometime after 2000 BCE in south-west
or south-central Asia, perhaps in the Caucasus region. Thus began the Iron Age, when iron
replaced bronze in implements and weapons.

This shift occurred because iron, when

alloyed with a bit of carbon, is harder, more durable, and holds a sharper edge than bronze.
For over three thousand years, until replaced by steel after CE 1870, iron formed the
material basis of human civilization in Europe, Asia, and Africa.
Iron is the fourth most abundant element and makes up more than five percent of the
earths crust. Iron exists naturally in iron ore (sometimes called ironstone). Since iron has a
strong affinity for oxygen, iron ore is an oxide of iron; it also contains varying quantities of
other elements such as silicon, sulfur, manganese, and phosphorus. Smelting is the process
by which iron is extracted from iron ore. When iron ore is heated in a charcoal fire, the iron
ore begins to release some of its oxygen, which combines with carbon monoxide to form
carbon dioxide. In this way, a spongy, porous mass of relatively pure iron is formed,
intermixed with bits of charcoal and extraneous matter liberated from the ore, known as slag.
(The separation of slag from the iron is facilitated by the addition of flux, that is, crushed
seashells or limestone.)

The formation of this bloom of iron was as far as the

primitive blacksmith got: he would remove this pasty mass from the furnace and hammer it
on an anvil to drive out the cinders and slag and to compact the metallic particles. This
was wrought iron(wrought means worked, that is, hammered) and contained generally
from .02 to .08 percent of carbon (absorbed from the charcoal), just enough to make the
metal both tough and malleable. Wrought iron was the most commonly produced metal
through most of the Iron Age.
At very high temperatures (rare except in a blast furnace -- see below), a radical
change takes place: the iron begins to absorb carbon rapidly, and the iron starts to melt, since
the higher carbon content lowers the melting point of the iron. The result is cast iron, which
contains from 3 to 4.5 percent carbon. This high proportion of carbon makes cast iron hard
and brittle; it is liable to crack or shatter under a heavy blow, and it cannot be forged (that is,
heated and shaped by hammer blows) at any temperature. By the late Middle Ages,
European ironmakers had developed the blast furnace, a tall chimney-like structure in which

combustion was intensified by a blast of air pumped through alternating layers of charcoal,
flux, and iron ore. (Medieval ironworkers also learned to harness water wheels to power
bellows to pump the air through blast furnaces and to power massive forge hammers; after
1777, James Watts new steam engine was also used for these purposes.) Molten cast iron
would run directly from the base of the blast furnace into a sand trough which fed a number
of smaller lateral troughs; this configuration resembled a sow suckling a litter of piglets, and
cast iron produced in this way thus came to be called pig iron. Iron could be cast directly
into molds at the blast furnace base or remelted from pig iron to make cast iron stoves, pots,
pans, firebacks, cannon, cannonballs, or bells (to cast means to pour into a mold, hence the
name cast iron). Casting is also called founding and is done in afoundry.
Ironmakers of the late Middle Ages also learned how to transform cast pig iron into
the more useful wrought iron by oxidizing excess carbon out of the pig iron in a charcoal
furnace called a finery. After 1784, pig iron was refined in a puddling furnace (developed
by the Englishman Henry Cort). The puddling furnace required the stirring of the molten
metal, kept separate from the charcoal fire, through an aperture by a highly skilled craftsman
called a puddler; this exposed the metal evenly to the heat and combustion gases in the
furnace so that the carbon could be oxidized out. As the carbon content decreases, the
melting point rises, causing semi-solid bits of iron to appear in the liquid mass. The puddler
would gather these in a single mass and work them under a forge hammer, and then the hot
wrought iron would be run through rollers (in rolling mills) to form flat iron sheets or
rails; slitting mills cut wrought iron sheets into narrow strips for making nails.
While blast furnaces produced cast iron with great efficiency, the process of refining
cast iron into wrought iron remained comparatively inefficient into the mid-1800s. Historian
David Landes writes: The puddling furnace remained the bottleneck of the industry. Only
men of remarkable strength and endurance could stand up to the heat for hours, turn and stir
the thick porridge of liquescent metal, and draw off the blobs of pasty wrought iron. The
puddlers were the aristocracy of the proletariat, proud, clannish, set apart by sweat and
blood. Few of them lived past forty. Numerous efforts were made to mechanize the
puddling furnace in vain. Machines could be made to stir the bath, but only the human eye

and touch could separate out the solidifying decarburized metal. The size of the furnace and
productivity gains were limited accordingly (The Cambridge Economic History of Europe,
Vol. VI, Part I, 1966, p. 447).
Another important discovery in the 1700s (by the Englishman Abraham Darby) was
that coke (a contraction of coal-cake), or coal baked to remove impurities such as sulfur,
could be substituted for charcoal in smelting. This was an important advance since charcoal
production had led to severe deforestation across western Europe and Great Britain.
Steel has a carbon content ranging from 0.2 to 1.5 percent, enough carbon to make it
harder than wrought iron, but not so much as to make it as brittle as cast iron. Its hardness
combined with its flexibility and tensile strength make steel far more useful than either type
of iron: it is more durable and holds a sharp edge better than the softer wrought iron, but it
resists shock and tension better than the more brittle cast iron. However, until the mid 1800s,
steel was difficult to manufacture and expensive. Prior to the invention of the Bessemer
converter (described below), steel was made mainly by the so-called cementation process.
Bars of wrought iron would be packed in powdered charcoal, layer upon layer, in tightly
covered stone boxes and heated. After several days of heating, the wrought iron bars would
absorb carbon;

to distribute the carbon more evenly, the metal would be broken up,

rebundled with charcoal powder, and reheated. The resulting blister steel would then be
heated again and brought under a forge hammer to give it a more consistent texture. In the
1740s, the English clockmaker Benjamin Huntsman, searching for a higher-quality steel for
making clock springs, discovered that blister steel could be melted in clay crucibles and
further refined by the addition of a special flux that removed fine particles of slag that the
cementation process could not remove. This was called crucible steel; it was of a high
quality, but expensive.
To sum up so far: wrought iron has a little carbon (.02 to .08 percent), just enough to make it
hard without losing its malleability. Cast iron, in contrast, has a lot of carbon (3 to 4.5
percent), which makes it hard but brittle and nonmalleable. In between these is steel, with .2
to 1.5 percent carbon, making it harder than wrought iron, yet malleable and flexible, unlike

cast iron. These properties make steel more useful than either wrought or cast iron, yet prior
to 1856, there was no easy way to control the carbon level in iron so as to manufacture steel
cheaply and efficiently. Yet the growth of railroads in the 1800s created a huge market for
steel. The first railroads ran on wrought iron rails which were too soft to be durable. On
some busy stretches, and on the outer edges of curves, the wrought iron rails had to be
replaced every six to eight weeks. Steel rails would be far more durable, yet the labor- and
energy-intensive process of cementation made steel prohibitively expensive for such largescale uses.
The mass-production of cheap steel only became possible after the introduction
of the Bessemer process, named after its brilliant inventor, the British metallurgist Sir Henry
Bessemer (1813-1898). Bessemer reasoned that carbon in molten pig iron unites readily with
oxygen, so a strong blast of air through molten pig iron should convert the pig iron into steel
by reducing its carbon content. In 1856 Bessemer designed what he called a converter, a
large, pear-shaped receptacle with holes at the bottom to allow the injection of compressed
air. Bessemer filled it with molten pig iron, blew compressed air through the molten metal,
and found that the pig iron was indeed emptied of carbon and silicon in just a few minutes;
moreover, instead of freezing up from the blast of cold air, the metal became even hotter and
so remained molten. Subsequent experimentation by another British inventor, Robert
Mushet, showed that the air blast actually removed too much carbon and left too much
oxygen behind in the molten metal. This made necessary the addition of a compound of iron,
carbon, and manganese called spiegeleisen (or spiegel for short): the manganese removes
the oxygen in the form of manganese oxide, which passes into the slag, and the carbon
remains behind, converting the molten iron into steel (Ferromanganese serves a similar
purpose). The blast of air through the molten pig iron, followed by the addition of a small
quantity of molten spiegel, thus converts the whole large mass of molten pig iron into steel in
just minutes, without the need for any additional fuel (as contrasted with the days, and tons of
extra fuel and labor, required for puddling and cementation).
One shortcoming of the initial Bessemer process, however, was that it did not remove
phosphorus from the pig iron. Phosphorus makes steel excessively brittle. Initially,

therefore, the Bessemer process could only be used on pig iron made from phosphorus-free
ores. Such ores are relatively scarce and expensive, as they are found in only a few places
(e.g. Wales and Sweden, where Bessemer got his iron ore, and upper Michigan). In 1876, the
Welshman Sidney Gilchrist Thomas discovered that adding a chemically basic material such
as limestone to the converter draws the phosphorus from the pig iron into the slag, which
floats to the top of the converter where it can be skimmed off, resulting in phosphorus-free
steel (This is called the basic Bessemer process, or the Thomas basic process). This
crucial discovery meant that vast stores of iron ore from many regions of the world could be
used to make pig iron for Bessemer converters, which in turn led to skyrocketing production
of cheap steel in Europe and the U.S. In the U.S., for example, in 1867, 460,000 tons of
wrought iron rails were made and sold for $83 per ton; only 2550 tons of Bessemer steel
rails were made, fetching a price of up to $170 per ton. By 1884, in contrast, iron rails had
virtually ceased to be made at all; steel rails had replaced them at an annual production of
1,500,000 tons selling at a price of $32 per ton. Andrew Carnegies genius for lowering
production costs would drive prices as low as $14 per ton before the end on the century.
(This drop in cost was accompanied by an equally dramatic increase in quality as steel
replaced iron rails: from 1865 to 1905, the average life of a rail increased from two years to
ten and the car weight a rail could bear increased from eight tons to seventy).
The Bessemer process did not have the field to itself for long as inventors sought
ways around the patents (over 100 of them) held by Henry Bessemer. In the 1860s, a rival
appeared on the scene: the open-hearth process, developed primarily by the German
engineer Karl Wilhelm Siemens. This process converts iron into steel in a broad, shallow,
open-hearth furnace (also called a Siemens gas furnace since it was fueled first by coal gas,
later by natural gas) by adding wrought iron or iron oxide to molten pig iron until the carbon
content is reduced by dilution and oxidation. Using exhaust gases to preheat air and gas prior
to combustion, the Siemens furnace could achieve very high temperatures. As with
Bessemer converters, the use of basic materials such as limestone in open-hearth furnaces
helps to remove phosphorus from the molten metal (a modification calledthe basic openhearth process). Unlike the Bessemer converter, which makes steel in one volcanic rush,
the open-hearth process takes hours and allows for periodic laboratory testing of the molten

steel so that steel can be made to the precise specifications of the customer as to chemical
composition and mechanical properties. The open hearth process also allows for the
production of larger batches of steel than the Bessemer process and the recycling of scrap
metal. Because of these advantages, by 1900 the open hearth process had largely replaced
the Bessemer process. (After 1960, it was in turn replaced by the basic oxygen process, a
modification of the Bessemer process, in the production of steel from iron ore, and by the
electric-arc furnace in the production of steel from scrap.)
Unlike many of his competitors, Andrew Carnegie was quick to recognize the
importance of the Bessemer, Thomas basic, and open-hearth processes. He was also among
the first steelmakers to grasp the vital importance of chemistry in steelmaking. These
became keys to his success as a steel manufacturer.
The mass production of cheap steel, made possible by the discoveries described above
(and many others not mentioned), has revolutionized our world. Consider a brief and
incomplete list of the products made possible (or better or more affordable) by cheap,
abundant steel: railroads, oil and gas pipelines, refineries, power plants, power lines,
assembly lines, skyscrapers, elevators, subways, bridges, reinforced concrete, automobiles,
trucks, buses, trolleys, refrigerators, washing machines, clothes dryers, dishwashers, nails,
screws, bolts, nuts, needles, wire, watches, clocks, canned food, battleships, aircraft carriers,
oil tankers, ocean freighters, shipping containers, cranes, bulldozers, tractors, farm
implements, fences, knives, forks, spoons, scissors, razors, surgical instruments, ballbearings, turbines, drill bits, saws, and tools of every sort.
In view of his moral failings, can we really consider Carnegie a portrait of human
greatness? The case for an affirmative answer is this. We are heirs to thousands of years of
technological progress, and we benefit every day from the ingenuity and hard work of many
thousands of blacksmiths, ironworkers, steelworkers, engineers, inventors, chemists,
metallurgists, and entrepreneurs, long since deceased, one of whom was Carnegie and few of
whom were saints. Our standard of living today owes much to Carnegies entrepreneurial
drive, self-education, and genius for efficiency. Whatever his flaws and who among us has

none? Carnegie embodied a type of human greatness that deserves our appreciation and
gratitude. Without forgetting the contributions of others (especially his workers), we should
make the same judgment about Carnegie that Stephen Ambrose makes about the men who
built the first transcontinental railroad: Things happened as they happened. It is possible to
imagine all kinds of different routes across the continent, or a better way for the government
to help private industry, or maybe to have the government build and own it. But those things
didnt happen, and what did take place is grand. So we admire those who did it even if
they were far from perfect for what they were and what they accomplished and how much
each of us owes them. (Nothing Like It In the World [New York: Simon and Schuster: 2000],
p. 382)

Steel in india
Iron and steel industry is a basic industry which provides sound base for modern industrial
development.
It provides raw materials for machine tools, construction, transport, agricultural implements
and several other industries which are so essential for modern civilization and way of life.
So much so that the quantity of steel production and its per capita consumption are used as
measures to judge the level of industrialisation and economic development. Although India
is the eighth largest steel producing country of the world but its per capita consumption of
steel (24 kg in 1998-99) is much below than the world average (150 kg) and developed
countries (U.S.A. 700 kg).

Historical Development
The art of steel making has been known to India since early times as is proved by the famous
iron pillar of Delhi dating back to 350 A.D. Similarly the woods steel, manufactured in
Hyderabad, was exported to Persia so as to be used in the manufacture of famous Damascus
blades during the medieval times.
The first attempt to produce iron and steel, on modern lines, was made in 1830 at Porto Novo
(Tamil Nadu). The mill was closed down in 1866. Similar attempts were made at Bayport

(Kerala), Coimbatore (Tamil Nadu), Birbhum (West Bengal) and Kaladhungi (Uttar Pradesh)
during 1830-60; all of which were unsuccessful. For the first time the pig iron was produced
successfully in 1874 by the Bengal Iron Works, a predecessor of the Bengal Iron Company
incorporated into IISCO subsequently.
A turning point in the history of iron and steel production in India came in 1907 when the
Tata Iron and Steel Company were set up at Sakchi (now Jamshedpur) by Sri J.N. Tata. The
factory started its first production of pig iron in 1908 and steel in 1911. The First World War
gave

big

boost

up

to

the

industry. Consequently, the Indian Iron and Steel Company Ltd. (IISCO) was set up at
Hirapurin 1918 and the Visveswaraya Iron and Steel Ltd. (VISL) at Bhadravati in 1923.
Protection by the government and the Second World War gave further impetus to the
industry. In 1949 the three steel plants (TISCO, IISCO and VISL) with total installed
capacity of 1.2 million tons produced 9.76 lakh tonnes of steel.
After Independence rapid stride in iron and steel industry was made during 1956-61 with the
establishment of three new integrated steel plants under Hindustan Steel Ltd. at Rourkela,
Bhilai and Durgapur, with a total capacity of 10 lakh tonnes each.
The capacity of TISCO and IISCO was also increased to 20 lakh tonnes and 10 takh tonnes
respectively. In the Third Five Year Plan efforts were made to expand the capacity of three
existing public sector plants and set up a new steel plant at Bokaro (in 1964) which started
production in 1972 (capacity 17 lakh tonnes).
The Steel Authority of India Ltd. (SAIL) was set up in January 1973 to ensure co-ordinate
development of the industry in the public and private sectors. In the Fifth Five Year Plan
decision was taken to set up four new steel plants at Salem (Tamil Nadu), Vijaynagar
(Karnataka), Vishakhapatnam (Andhra Pradesh) and Paradwip (Orissa).

The expansion

projects for Rourkela and Durgapur steel plants have been completed in 1996- 97.
The new industrial policy announced in July 1991 has removed 'iron and steel' from the list
of industries reserved for the public sector, and has also exempted it from the requirements of

compulsory licensing. Entrepreneurs are;

therefore, free to set up steel plants of any

capacity, subject to certain location restrictions.

WORLDS TOP STEEL PRODUCING COUNTRIES

Countries
China
Japan
USA
India
Russia
South Korea
Germany
Turkey
Brazil
Ukraine

Rank
1
2
3
4
5
6
7
8
9
10

Million ton/Year Approx.

500-700
100
90
80
70
69
42
35
34
23

WORLDS TOP STEEL EXPORTERS & IMPORTERS COUNTRIES

Position
1
2
3
4
5
6
7
8
9
10

Exporters
Countries
Mt/Y Approx.
China
45-50
Japan
40
EU
36
S Korea
28
Russia
26
Ukraine
25
Turkey
17
USA
12
Taiwan
10
Brazil
9

Importers
Countries
Mt/Y Approx.
USA
29
EU
26
S Korea
20
Thailand
15
China
14
Indonesia
12
Turkey
11
Canada
9.2
India
9
Mexico
9

WORLDS TOP STEEL PRODUCING COMPANIES

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

Arcelor Mittal

Luxembour

98,200,000

Baosteel

China

37,000,000

Posco

South

35,400,000

Korea

Nippon Steel

Japan

35,000,000

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

JFE Holdings

Japan

31,100,000

Jiangsu

China

23,200,000

Shagang
Group

Tata Steel

India

23,200,000

U.S. Steel

USA

22,300,000

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

Anshan Iron &

China

22,100,000

Steel Group
(Ansteel)

10

Gerdau

Brazil

18,700,000

11

Nucor

USA

18,300,000

12

Severstal

Russia

18,200,000

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

13

Wuhan Iron &

China

16,600,000

Steel Group
(Wisco)

14

Thyssenkrupp

Germany

16,400,000

15

Evraz Group

Russia

16,300,000

16

Shougang

China

14,900,000

Group

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

17

Gruppo Riva

Italy

14,000,000

18

Steel Authority

India

13,600,000

Japan

13,300,000

South

12,900,000

Of India
(SAIL)

19

Sumitomo
Metal
Industries

20

Hyundai Steel
(HSC)

Korea

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

21

China Steel

Taiwan

12,700,000

Russia

11,900,000

Russia

11,400,001

Iran

11,400,000

Corporation

22

Novolipetsk
Steel (NLMK)

23

Magnitogorsk
Iron And Steel
Works (MMK)

24

Iranian Mines
& Mining
Industries
(IMIDRO)

Crude Steel
No

Company Logo

Company Name

Country

Company Picture

Output per 2010

year (MT)

25

Techint
(Tenaris)

Luxembour
g

8,800,000

SAIL manufactures and sells a broad range of steel products, including hot and cold rolled
sheets and coils, galvanised sheets, electrical sheets, structurals, railway products, plates, bars
and rods, stainless steel and other alloy steels.

SAIL produces iron and steel at five

integrated plants and three special steel plants, located principally in the eastern and central
regions of India and situated close to domestic sources of raw materials, including the
Company's iron ore, limestone and dolomite mines. The company has the distinction of
being Indias second largest producer of iron ore and of having the countrys second largest
mines network. This gives SAIL a competitive edge in terms of captive availability of iron
ore, limestone, and dolomite which are inputs for steel making.
SAIL's wide range of long and flat steel products are much in demand in the domestic as well
as the international market. This vital responsibility is carried out by SAIL's own Central
Marketing Organisation (CMO) that transacts business through its network of 37 Branch
Sales Offices spread across the four regions, 25 Departmental Warehouses, 43 Consignment
Agents and 27 Customer Contact Offices. CMOs domestic marketing effort is supplemented
by its ever widening network of rural dealers who meet the demands of the smallest
customers in the remotest corners of the country. With the total number of dealers over
2000 , SAIL's wide marketing spread ensures availability of quality steel in virtually all the
districts of the country.
SAIL's International Trade Division ( ITD), in New Delhi- an ISO 9001:2000 accredited unit
of CMO, undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated
steel plants.
With technical and managerial expertise and know-how in steel making gained over four
decades, SAIL's Consultancy Division (SAILCON) at New Delhi offers services and
consultancy to clients world-wide.
SAIL has a well-equipped Research and Development Centre for Iron and Steel (RDCIS) at
Ranchi which helps to produce quality steel and develop new technologies for the steel
industry. Besides, SAIL has its own in-house Centre for Engineering and Technology (CET),
Management Training Institute (MTI) and Safety Organisation at Ranchi. Our captive mines
are under the control of the Raw Materials Division in Kolkata.

The Environment

Management Division and Growth Division of SAIL operate from their headquarters in
Kolkata. Almost all our plants and major units are ISO Certified.

Background & history SAIL

The Precursor
SAIL traces its origin to the formative years of an emerging nation - India. After
independence the builders of modern India worked with a vision - to lay the infrastructure for
rapid industrialisaton of the country. The steel sector was to propel the economic growth.
Hindustan Steel Private Limited was set up on January 19, 1954.
Expanding Horizon (1959-1973)
Hindustan Steel (HSL) was initially designed to manage only one plant that was coming up
at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by the
Iron and Steel Ministry. From April 1957, the supervision and control of these two steel
plants were also transferred to Hindustan Steel. The registered office was originally in New
Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi 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 was completed 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, was
incorporated in January 1964 to construct and operate the steel plant at Bokaro.The second
phase of Bhilai Steel Plant was completed in September 1967 after commissioning of the
Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem Mill - was
commissioned in February 1968, and the 1.6 MT stage of Durgapur Steel Plant was
completed 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 at Rourkela and 1.6 MT at Durgapur, the
total crude steel production capacity of HSL was raised to 3.7 MT in 1968-69 and
subsequently to 4MT in 1972-73.

Holding Company
The Ministry of Steel and Mines drafted a policy statement to evolve a new model for
managing industry. The policy statement was presented to the Parliament on December 2,
1972. On this basis the concept of creating a holding company to manage inputs and outputs
under one umbrella was mooted. This led to the formation of Steel Authority of India Ltd.
The company, incorporated on January 24, 1973 with an authorized capital of Rs. 2000 crore,
was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur,
Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was
restructured as an operating company.
Since its inception, SAIL has been instrumental in laying a sound infrastructure for the
industrial development of the country. Besides, it has immensely contributed to the
development of technical and managerial expertise. It has triggered the secondary and
tertiary waves of economic growth by continuously providing the inputs for the consuming
industry

Vision of SAIL
O be a respected world class corporation and the leader in Indian steel business in quality,
mproductivity, profitability and customer satisfication.

CREDO/Mission of SAIL (What We Do)

We build lasting relationships with customers based on trust and mutual benefit.
We uphold highest ethical standards in conduct of our business.
We create and nurture a culture that supports flexibility, learning and is proactive to change.
We chart a challenging career for employees with opportunities for advancement and
rewards.
We value the opportunity and responsibility to make a meaningful difference in people's
lives.

ORGANISATIONAL STRUCTURE OF SAIL

SAIL has been best performing steel company because of the quality of the internal working
of its various departments and their commendable synchronization. Various departments, by
quality and consistency of their practices have contributed majorly in commendable working

of the SAIL.

The organizational

the help of a flow

structure of SAIL has been shown below with

chart.

Highlights of SAIL Plan

World class technology and

(head

hardened

&

products
New universal rail mill

special Hy.Rails), universal beam

mill (700-900mm),new wire rod/merchant mill,structural mill,new hsm(thin slab

casting), api x-70/80/100, new crm with pickling and tandem mill and wide plate

mill(upto 4.3m)
High component of value added products and increased finished steel from 85%

to 96%
100% BoF steel making, 100% production through cc route
Coke dry quenching, desulphurisation of hot metal and pelletisation/beneficiation
plant

Marketing Strategy

Ensuring Dominant position in Indian Steel Market

Capture prestigious Project orders and continuous thrust on sales to growing end-

user segments.
Further thrust on Key Account Management Process
Building & Enhancing Brand Value of SAIL products Build brand image for

SAIL Products [Long Products& Special Flat Products]

Vigorous thrust on SAIL Dealership Scheme to promote SAIL steel in rural areas.
Maximizing IT enabled customers service and interactions

Major Units of SAIL

Integrated Steel Plants

Bhilai Steel Plant (BSP) in Chhattisgarh: Chhattisgarh set up with Soviet

collaboration (1959)
PRODUCT-MIX

TONNES/ANNUM

Semis

5,33,000

Rail & Heavy Structural

7,50,000

Merchant Products

5,00,000

(Angles, Channels, Round & TMT bars)

Wire Rods (TMT, Plain & Ribbed)

4,20,000

Plates (up to 3600 mm wide)

9,50,000

Total Saleable steel

31,53,000

Durgapur Steel Plant (DSP) in West Bengal: Durgapur, West Bengal set up
with British collaboration (1965)
PRODUCT-MIX

TONNES/ANNUM

Merchant Products

2,80,000

Structural

2,07,000

Skelp

1,80,000

Wheels & Axles

58,000

Semis

8,61,000

Total Saleable steel

15,86,000

Rourkela Steel Plant (RSP) in Orissa: Odisha set up with German collaboration
(The first integrated steel plant in the Public Sector in India, 1959)

PRODUCT-MIX

MILLION TONNES/ANNUM

MILLION TONNES/ANNUM

(EXISTING CAPACITY)

(POST EXPANSION)

Hot Metal

2.00

4.5

Crude Steel

1.90

4.2

Saleable Steel

1.67

3.9

Bokaro Steel Plant (BSL) in Jharkhand: Jharkhand (1965) set up with Soviet
collaboration (The Plant is hailed as the countrys first Swadeshi steel plant, built with
maximum indigenous content in terms of equipment, material and know-how)
PRODUCT-MIX

TONNES/ANNUM

HR Coils/ Sheets/ Plates

3955

CR Coils/ Sheets

1660

CR Coils/ Sheets, TMBP

100

GP Coils & Sheets GC Sheets

170

IISCO Steel Plant (ISP) in West Bengal: Burnpur (near Asansol), West
Bengal(1918)

PRODUCT-MIX

SPECIFICATION

Wire rod

Carbon steel, Spring steel, EQ grade, Ball-bearing steel, Free-cutting steel,

(0.5 22) mm

Cold-heading steel, Low-alloy steel, Forging quality steel

Rebar

Low medium carbon steel, Carbon steel

Beam

IPE 240 IPE 750 mm, IPM 350 mm, HEA 200 450, HEB 200 450

Channel

200 400 mm

Angles

150 200 mm

Bulb Bars

200 340 mm

Z Bars

ISPS 1625 U 2222 U, 1021 Z, 1481

Special Steel Plants

Alloy Steels Plants (ASP) in West Bengal: Durgapur, West Bengal(1965)

PRODUCT-MIX

SPECIFICATION

Rolled Round Cornered Square (RCS) Billets

75 152

Rolled Round Cornered Square (RCS) Blooms

160 340

PRODUCT-MIX

Rolled Rounds

75 205

Forged Squares

100 550

Forged Rounds

100 625

Plates (Non-Stainless Steel)

5 - 40 thick

Concast (CC) Slabs (Stainless / Non-Stn Steel)

170 x 900-1300

Salem Steel Plant (SSP) in Tamil Nadu: Tamil Nadu

PRODUCT-MIX

SPECIFICATION

TONNES/ANNUM

Cold rolled stainless steel flat product (Coils/Sheets/Blanks)

65000

Hot rolled stainless steel/carbon steel flat product (Coils/Sheets)

110000

Total Saleable Steel

175000

Visvesvaraya Iron and Steel Plant (VISL) in Karnataka: (Bhadravathi,

Karnataka) Visvesvaraya Iron and Steel Plant (VISL) is a pioneer in production of high
quality alloy and special steels and pig iron. Steel is produced through BF-BOF-LRF-VD
route. VISL has an installed capacity of 77,000 tonnes of alloy and special steels and
205,000 tonnes of hot metal.
Ferro Alloy Plant

Chandrapur Ferro Alloy Plant: Maharashtra

Size in
Product-mix
High Carbon Ferro
Manganese

Chemical specification

mm
10-150
40-100
12-25

Manganese
70-74 % and 74-78
%

6-8 %

Low Carbon Ferro

10-150

70-74 % and 74-78

1.5 %

Manganese

40-100

max

Medium Carbon Ferro

10-150

70-74 % and 74-78

Manganese

25-50

Silico Manganese

10-150
40-100
12-25

60-65 % and 65 %
Min

Subsidiary

Carbon

SAIL Refractory Company Limited :

PRODUCTS-MIX
SRCLs range of products includes:
Magnesite bricks
Magnesite-chrome bricks
Chrome-magnesite bricks
Magnesite-carbon bricks
Bulk & monolithics
Dunite & dunite fractions
Ground calcined magnesite

Joint Ventures

1-3%

Silicon

Phosphorous

1.5 % max 0.43 % max

2 % max

0.4 % max

2 % max

0.4 % max

2 % max 15-20 %

0.35 % max

NTPC SAIL Power Company Pvt. Limited (NSPCL): A 50:50 joint venture
between Steel Authority of India Ltd (SAIL) and National Thermal Power Corporation
Ltd (NTPC Ltd); manages SAILs captive power plants at Rourkela, Durgapur and Bhilai
with a combined capacity of 814 megawatts (MW).

Bokaro Power Supply Company Pvt. Limited (BPSCL): This 50:50 joint venture
between SAIL and the Damodar Valley Corporation (DVC) is managing the 302-MW
power generating station and 660 tonnes per hour steam generation facilities at Bokaro
Steel Plant.

Mjunction Services Limited: A 50:50 joint venture between SAIL and Tata Steel;
promotes e-commerce activities in steel and related areas. Its newly added services
include e-assets sales, events & conferences, coal sales & logistics, publications, etc.

SAIL-Bansal Service Centre Limited: A joint venture with BMW Industries Ltd.
on 40:60 basis for a service centre at Bokaro with the objective of adding value to steel.

Bhilai JP Cement Limited: A joint venture company with Jaiprakash Associates

Ltd on 26:74 basis to set up a 2.2 million tonne (MT) slag-based cement plant at Bhilai.

Bokaro JP Cement Limited: Another joint venture company with Jaiprakash

Associates Ltd on 26:74 basis to set up a 2.1 MT slag-based cement plant at Bokaro.

SAIL & MOIL Ferro Alloys (Pvt.) Limited: A joint venture company with
Manganese Ore (India) Ltd on 50:50 basis to produce ferro-manganese and silicomanganese required in production of steel.

S & T Mining Company Pvt. Limited: A 50:50 joint venture company with Tata
Steel for joint acquisition & development of mineral deposits; carrying out mining of
minerals including exploration, development, mining and beneficiation of identified
coking coal blocks.

International Coal Ventures Private Limited: A joint venture company/SPV

promoted by five central PSUs, viz. SAIL, CIL, RINL, NMDC and NTPC (with

respectively 28.7%, 28.7%, 14.3%, 14.3% and 14.3% shareholding) aiming to acquire
stake in coal mines/blocks/companies overseas for securing coking and thermal coal
supplies.

SAIL SCI Shipping Pvt. Limited: A 50:50 joint venture with Shipping Corporation
of India for provision of various shipping and related services to SAIL for importing of
coking coal and other bulk materials and other shipping-related business.

SAIL RITES Bengal Wagon Industry Pvt. Limited: A 50:50 joint venture with
RITES to manufacture, sell, market, distribute and export railway wagons, including
high-end specialised wagons, wagon prototypes, fabricated components/parts of railway
vehicles, rehabilitation of industrial locomotives, etc., for the domestic market.

SAIL SCL Limited: A 50:50 JV with Government of Kerala where SAIL has
management control to revive the existing facilities at Steel Complex Ltd, Calicut and
also to set up, develop and manage a TMT rolling mill of 65,000 MT capacity along with
balancing facilities and auxiliaries.

Ownership and Management: The Government of India owns about 80% of

SAIL's equity and retains voting control of the Company. However, SAIL, by virtue of its
Maharatna status, enjoys significant operational and financial autonomy