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Comparative analysis of Private and

Public sector steel companies
with special reference to TATA Steel and SAIL.

Prepared and
Submitted by:



a) World Steel Industry : An Overview
b) Indian steel Industry
c) What is Private limited and Public limited
d) Private sector companies in India
e) Public sector companies in India




a) Research design
b) Data collection method


Comparison between TATA Steel and Steel Authority of India

a) Production
b) Financials
c) Research and Development
d) Environment
e) Workforce and Welfare of Society
f) Technology
g) Safety measures
Measures taken by Indian government to improve the industry.
National Steel Policy, 2005.



World Steel industry: An overview

Steel, the recycled material is one of the top products in the manufacturing sector
of the world.

The Asian countries have their respective dominance in the production of the steel
all over the world. India being one among the fastest growing economies of the world
has been considered as one of the potential global steel hub internationally. Over the
years, particularly after the adoption of the liberalization policies all over the world, the
World steel industry is growing very fast.

Steel Industry is a booming industry in the whole world. The increasing demand
for it was mainly generated by the development projects that have been going on along
the world, especially the infrastructural works and real estate projects that has been on
the boom around the developing countries. Steel Industry was till recently dominated by
the United Sates of America but this scenario is changing with a rapid pace with the
Indian steel companies on an acquisition spree. In the last one year, the world has seen
two big Mergers & Acquisitions deals to take place:-

The Mittal Steel, listed in Holland, has acquired the world's largest steel company
called Arcelor Steel to become the world's largest producer of Steel named
Tata Steel of India or TISCO (as listed in BSE) has acquired the world's fifth
largest steel company, Corus, with the highest ever stock price.

It has been observed that Steel Industry has grown tremendously in the last one
and a half decade with a strong financial condition. The increasing needs of steel by the
developing countries for its infrastructural projects have pushed the companies in this
industry near their operative capacity.

The most significant growth that can be seen in the Steel Industry has been
observed during the period 1960 to 1974 when the consumption of steel around the
whole world doubled. Between these years, the rate at which the Steel Industry grew
has been recorded to be 5.5 %. This roaring market saw a phase of deceleration from
the year 1975 which continued till 1982. After this period, the continuous fall slowed
down and again started its upward movement from the early 1990s.

Steel Industry is becoming more and more competitive with every passing day.
During the period 1960s to late 1980s, the steel market used to be dominated by OECD
(Organization for Economic Cooperation and Development) countries. But with the fast
emergence of developing countries like China, India and South Korea in this sector has
led to slipping market share of OECD countries. The balance of trade line is also tilting
towards these countries.

The main demand creators for Steel Industry are Automobile industry,
Construction Industry, Infrastructure Industry, Oil and Gas Industry, and Container
New innovations are also taking place in Steel Industry for cost minimization and
at the same time production maximization. Some of the cutting edge technologies that
are being implemented in this industry are thin-slab casting, making of steel through the
use of electric furnace, vacuum degassing, etc.

In the year 2004, the global steel production has made a record level by crossing
the 1000 million tones. Among the top producers in the steel production, China ranked
1 in the world.

Indian Steel Industry

Iron and steel, is vital to the Indian economy for economic growth and economic
well-being. No practical substitutes exist on a large scale for iron and steel because of
the relatively high cost of alternative materials.

Worldwide, there are broadly two major categories of steel playersIntegrated

steel producers (ISPs) and mini-mills/secondary producers, although variations and
combinations of the two exist. The key difference between the two is the type of iron
bearing feedstock they consume. In an integrated mill, this is predominantly iron ore,
with a smaller quantity of steel scrap. A mini-mill produces steel uses mainly steel scrap,
or increasingly, other sources of metallic iron such as directly reduced iron (DRI)/hot
briquette iron (HBI).

The iron and steel industry not only directly accounts for about 2% of GDP, it also
has a bearing on how the consumer goods and downstream infrastructure sectors
develop. Further, with a share of approximately 10%, the sector is amongst the largest
contributors to the central excise. India accounted for 3.4% of the estimated world steel
production of 1,129 million tonnes (mt) during 2005. At present, India is the 7th largest
crude steel producing country in the world.

In 2006-07, production of Finished (Carbon) Steel was 49.350 million tonnes

(Prov). Production of Pig Iron in 2006-07 is estimated to be 4.960 Million Tonnes (Prov).
The share of Main Producers (i.e SAIL, RINL and TSL) and secondary producers in the
total production of Finished (Carbon) steel was 35% and 65% respectively during the
period of April-December, 2006.

Size of Industry-

India is among the top 10 global suppliers of steel in the world.

More than 35 million tonnes of steel is produced in India per annum.

India is also the largest producer of sponge iron in the world.

This sector represents around Rs. 1 trillion of capital investments, and directly
provides employment to around 0.5 million, with the integrated steel plants
accounting for a 40% share.

The iron and steel sector also contributes around 6.2% of Indias manufactured
goods exports and 4.6% of total exports by value.

Structural Characteristics of Indian Steel Industry-

The industry is dominated by large integrated players like SAIL and Tata Steel in

The Public sector has a significant presence in this industry, Steel Authority of
India Ltd. (SAIL) has 32% of Indias installed capacity of crude steel.
Tata Steel and Essar Steel are the major private players in the industry.

The industrys fortunes depend on general global economic conditions but it is

particularly sensitive to the performance of the automotive, construction, durable
equipment, and other industrial products industries. The trend in the last few
years in steel prices shows that the steel industry is cyclical.

The global (and Indian) steel industry also suffers from cycles of over capacity
and shortages. This too leads to cyclically falling/rising prices and industry

Integrated steel producers (ISPs)Tata Steel and SAILface high fixed costs,
and thus in a downturn, the percentage profit margins come down significantly.
The downturn phases have witnessed depressed prices at the firm level and
widespread operating losses.

Economic logic differs for mini mills that can vary output more quickly when prices

What is Private Limited and Public limited?

Now lets first understand the meaning and difference between Public Sector
Company and Private Sector Company. The term Private Company refers to
ownership of a business company in two different ways First, referring to ownership
by non-governmental organizations; and second, referring to ownership of the
company's stock by a relatively small number of holders who do not trade the stock
publicly on the stock market.

In countries with public trading markets, a privately held business company is

generally taken to mean one whose ownership shares or interests are not publicly
traded. Often, privately held companies are owned by the company founders and/or
their families and heirs or by a small group of investors. Sometimes employees also
hold shares of private companies. Most small businesses are privately held.
Private companies may be called corporations, limited liability companies,
partnerships, sole proprietorships, business trusts, or other names, depending on where
and how they are organized.

The term "Public Company" thus refers to a government-owned corporations.

and the ownership of assets and interest is shared by people. Normally, the shares of
a public company are owned by many investors. However, a company with many
shareholders is not necessarily a public company. The shares of a public company are
often traded on a stock exchange. The value or "size" of a public company is called its
market capitalization

It is able to raise funds and capital through the sale of its securities. This is the
reason why public corporations are so important: prior to their existence, it was very
difficult to obtain large amounts of capital for private enterprises. In addition to being
able to easily raise capital, public companies may issue their securities as compensation
for those that provide services to the company, such as their directors, officers, and

Private Sector companies in India

The private sector of the Steel Industry is currently playing an important and
dominant role in production and growth of steel industry in the country. During the period
(April-December 2006), 20.5 million tonne of steel was produced by Private Sector steel
units, out of the total production of 33.15 million tonne in the country. The private sector
units consist of major steel producers in one hand and relatively smaller & medium units
such as Sponge iron plants, Re-rolling mills, Electric Arc Furnaces and Induction
Furnaces on the other. They not only play an important role in production of primary and
secondary steel, but also contribute substantial value addition in terms of quality,
innovation and cost effectiveness.

TATA Steel:
Tata Steel is India's largest integrated private sector steel company. Established
in 1907, The Company is backward integrated with owned iron ore mines and collieries.
Tata Steel has an integrated steel plant, with an annual crude steel making capacity of
5 million tonne, located at Jamshedpur, Jharkhand.

The steel works is situated at Jamshedpur in the state of Jharkhand, India. The
factory covers 800 hectares of land. West Bokaro sub division in Hazaribagh district
overs 2000 hectares of land in which mining and coal beneficiation activities are
performed. Jharia Division occupies 2500 hectares of land for its industrial, mining and
domestic activities in the district of Dhanbad both in the state of Jharkhand. The iron
ore and dolomite mines are located at Noamundi in the state of Jharkhand and at Joda,
Kalamati, Khondbond and Gomardih in the state of Orissa.

Over the years, Tata Steel has emerged as a thriving, nimble steel enterprise due
to its ability to transform itself rapidly to meet the challenges of a highly competitive
global economy and commitment to become a supplier of choice. Constant
modernization and introduction of state-of-the-art technology at Tata Steel has enabled
it to stay ahead in the industry.

Tata Steel has completed the first nine months of fiscal 2006-07 with impressive
increase in its production and sales volumes. The hot metal production at 4.1 million
tonne is 8.2% more compared to the last year in the corresponding period and crude
steel production at 3.7 million tonne is higher by 7.9% compared to the last year in first
three quarters.

The saleable steel production at 3.7 million tonne registered a significant increase
of 11%. The total sales of 3.53 million tonne has grown by 11.7% over last financial year
in the corresponding period. The domestic sale of long products has increased by 30%.

Tata Steel is continuing with its programme of expansion of steel making capacity
by 1.8 million tonne to reach the rated capacity of 6.8 million tonne in fiscal 2007-08 and
thereafter to 10 million tonne by fiscal 2010.

Tata Steels greenfield projects in Orissa and Chhattisgarh are progressing on

schedule with placement of equipment order for Kalinganagar project in Orissa and
commencement of the land acquisition process. Jharkhand project is waiting
announcement of R & R policy of the state Government. The construction work of
ferrochrome project in South Africa is in full swing.

Acquisition of Corus: Recently Tata Steel acquired the Anglo-Dutch steel maker
Corus, thus emerging as the fifth largest steel producer in the world.

The steel major has won the Prime Minister's Trophy four times. This award is
instituted by the Indian ministry of steel and awarded to the country's best integrated
steel plant. In 2000, it became the first Tata company to win the JRD Tata QV award,
given to the company with 'world class' operations under the Group's Tata Business
Excellence Model

Areas of business

Apart from the main steel division, Tata Steel's operations are grouped under
strategic profit centres like tubes, growth shop (for its steel plant and material handling
equipment), bearings, ferro alloys and minerals, rings, agrico and wires.

Tata Steel's products include hot and cold rolled coils and sheets, tubes, wire rods,
construction bars, structurals, forging quality steel, rings and bearings. In an attempt to
'decommoditise' steel, the company has recently introduced brands like Tata Steelium
(India's first branded cold rolled steel), Tata Shaktee (galvanised corrugated sheets),
Tata Tiscon (re-rolled bars), Tata pipes, Tata bearings, Tata Wiron (galvanised wire
products) and Tata Agrico (hand tools and implements).

Tata Steel is also exploring opportunities in the ferro-chrome and titanium


Joint ventures, associates and subsidiaries

Tata Steel has numerous joint ventures and subsidiaries. Among them are:

Tinplate Company of India

Tayo Rolls
Tata Ryerson
Tata Refactories
Tata Sponge Iron
Tata Metaliks
Tata Pigments
Jamshedpur Injection Powder (Jamipol)
TM International Logistics
mjunction services
Jamshedpur Utility and Service Company (JUSCO)
The Indian Steel and Wire Products(ISWP)
Lanka Special Steel
Sila Eastern Company


Essar Steel is an integrated steel producer, with operations all along the value
chain. Essar Steel produces some of the worlds best steel at its state-of-the-art steel
complex at Hazira, Gujarat. It is also Indias largest exporter of flat products, sending
half of its production abroad, mainly to the highly demanding markets of the west, and
the growth markets of South East Asia and Middle East. Essar ensures excellent
customer services through a modern distribution network.

Essar Steels core manufacturing facilities are located at its steel complex in
Hazira, Gujarat. The Hazira complex includes a 5.5 million tonne per annum Hot
Briquetted Iron (HBI) plant, a 4.6 mtpa continuous caster slab facility, a 3.6 million tonne
per annum Hot Rolled Coils (HRC) and a 1.2 mtpa cold roll mill complex with all down
stream facilities. The facilities are complemented by its own 8.0 mtpa pellet plant at
Vishakapatnam and 0.4 million tonne per annum cold rolled coil plant at Indonesia.


Presently Essar Steel has embarked upon a capacity expansion for enhancement
of its production capacity from 4.6 million tonne per annum to 7.6 million tonne per
annum. The capacity expansion programme will consist of 2 units of Corex units of 1.5
million tonne per annum each. Further value addition will be carried out by Continuous
Strip Caster Mill, conventional Slab Caster Mill and a 5.2 meter Wide Plate Mill.

All Essar Steels products are world class, meeting the highest international
standards, supported by excellent marketing and service.


JSW Steel Ltd. is a 3.8 million tonne per annum integrated steel plant, having a
process route consisting broadly of iron ore beneficiation pelletisation sintering
coke making iron making through blast furnace as well as Corex process steel
making through BOFcontinuous casting of slabs hot strip rolling. The production
facilities include 3.0 million tonne per annum iron ore beneficiation unit, 5.0 million tonne
per annum pellet plant, 3.2 million tonne per annum sinter plant, 1.2 million tonne per
annum coke ovens, 0.9 + 1.3 million tonne per annum blast furnaces, two Corex units
of 0.8 million tonne per annum each, 3 X 130 t converters, three slab casters, and a 2.5
million tonne per annum hot strip mill with state-of-the-art coil box technology.

JSW Steel has a distinction of being certified to ISO-9001:2000 Quality

management system, ISO-14001:1996 environment management system and OHSAS
18001:1999 occupational health and safety management system.

During this year, JSW Steel has also been conferred with a number of awards.

Production Performance

(in million tonne)

Items 2003-04 2004-05 2005-06 April-Dec.06

Pellets 3.25 3.61 3.80 2.93

Hot Metal 1.63 1.96 2.40 2.19
Slabs 1.61 1.87 2.25 1.95
Hot Rolled Coils 1.54 1.78 2.10 1.48


Jindal Steel and Power Ltd. (JSPL), part of the $4 billion Jindal Organisation, has
business interests in steel, power generation, mining iron ore, coal and diamond
exploration/mining. The current turnover of the company is over Rs. 3,000 crore. JSPL
is the worlds largest producer of coal based sponge iron. The product range
encompasses 27 steel slabs, rounds, blooms and beam blanks. JSPL is producing rails
and H beams and columns in technical collaboration with JFE Corporation, Japan.
These H-beams are the most desired option of structural engineers worldwide. JSPL is
the largest private sector investor in the state of Chhattisgarh with a total investment
commitment of more than Rs. 10,000 crore. The company is also setting up a 6 million
tonne steel plant in Orissa with an investment of Rs. 13,500 crore and a 5 million tonne
steel plant in Jharkhand with an investment of Rs 11,500 crore.

Jindal Power Ltd., wholly-owned subsidiary of JSPL, is setting up a 1000 mega

watt O.P. Jindal super thermal power plant at Raigarh, with an investment of over Rs.
4,500 crore. JSPL has been rated as one of the best environmentally managed
companies in India and committed to environment protection as an integral part of their
business activities.


Ispat Industries Ltd. (IIL) has set up integrated steel plants at Dolvi (district
Raigad), a backward region of Maharashtra, with a capacity of 3 million tonne of hot
rolled coils per annum. The plant has got a 2.24 million tonne per annum sintering plant,
2 million tonne per annum blast furnace and 1.6 million tonne per annum gas based
sponge iron plant. IIL have uniquely combined the usage of hot metal and sponge iron
in the electric arc furnace for production of liquid steel for the first time in India. IIL have
also adopted the state-of-art technology called Compact Strip Production (CSP)
process, which has been installed for the first time in India and produces high quality
and very thin gauges of Hot Rolled Coils (HRC). The IILs products are accepted in the
domestic and international market.

The production performance of IIL during last three years has been as follows:

(in million tonne)

Items 2003-04 2004-05 2005-06
(Up to Dec06)
Hot Metal 1.29 1.40 1.42 1.14
Sponge Iron 1.06 1.05 0.89 0.85
Hot Rolled Coils 1.62 1.97 2.15 1.97

The two thin slab casters each with designed capacity to cast 55 and 60 mm slabs with
Iiquid Core Reduction (LCR) features available. Ispats casters have achieved global
benchmark in annual production, as confirmed by Steel Melting Shop (SMS) Demag,
the technology supplier.

The other major Private steel companies are


Saw Pipes.

Uttam Steels Ltd.

Mukand Ltd.

Mahindra Ugine Steel Company Ltd.

Usha Ispat Ltd.

Kalyani Steel Ltd

Electro Steel Castings Ltd.

Sesa Goa Ltd.


Lloyds SteeI Industries Ltd.

Public Sector companies in India

Steel Authority of India Limited (SAIL)

Steel Authority of India Limited (SAIL) is the leading steel-making company in
India. It is a fully integrated iron and steel maker, producing both basic and special steels
for domestic construction, engineering, power, railway, automotive and defence
industries and for sale in export markets.

The Government of India owns about 86% of SAIL's equity and retains voting
control of the Company. However, SAIL, by virtue of its Navratna status, enjoys
significant operational and financial autonomy

Ranked amongst the top ten public sector companies in India in terms of turnover,
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 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 is 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) and the International Trade Division.
CMO encompasses a wide network of 34 branch offices and 54 stockyards located in
major cities and towns throughout India.

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

Integrated Steel Plants

Bhilai Steel Plant (BSP) in Chhattisgarh

Durgapur Steel Plant (DSP) in West Bengal
Rourkela Steel Plant (RSP) in Orissa
Bokaro Steel Plant (BSL) in Jharkhand
IISCO Steel Plant (ISP) in West Bengal


Maharashtra Elektrosmelt Limited (MEL) in Maharashtra

Joint Ventures

SAIL has promoted joint ventures in different areas ranging from power plants to e-commerce.

NTPC SAIL Power Company Pvt. Ltd

Bokaro Power Supply Company Pvt. Limited
Mjunction Services Limited
SAIL-Bansal Service Centre Ltd.
Bhilai JP Cement Ltd
SAIL has signed an MOU with Manganese Ore India Ltd (MOIL) to set up a joint
venture company to produce ferro-manganese and silico-manganese at Bhilai.


Maharashtra Electrosmelt Ltd. is situated in Chandrapur, Maharashtra and is a major

producer of ferro manganese and silico manganese for captive use of SAIL plants. The
authorised and paid-up share capital of the company as on 31.3.2006 was Rs. 30 crore
and Rs. 24 crore respectively. SAILs holding is approximately 99.12% of the paid-up

Financial Performance
During the year 2005-06 the company recorded a turnover of Rs. 247.33 crore (including
conversion income of Rs. 171.10 crore) and made a net profit after tax of Rs. 20.97
crore. The turnover and net profit after tax of the company during April, 2006 to
December, 2006 were Rs. 220.26 crore (provisional) and Rs. 17.48 crore (provisional)

Production Performance

The production of all grades of ferro alloys during 2005-06 is as under:

(in tonne)

Materials 2005-06 April- Dec 2006

High Carbon Ferro Manganese 51525 49493

Silco Manganese 46712 32921

Medium Carbon Ferro Manganse 2344 164


Visakhapatnam Steel Plant (VSP) is the first shore based integrated steel plant located
at Visakhapatnam in Andhra Pradesh. The plant was commissioned in August 1992
with a capacity to produce 3 million tonne per annum of liquid steel. The plant has been
built to matching international standards in design and engineering with the state-of-the-
art technology, incorporating extensive energy saving and pollution control measures.
VSP has an excellent layout, which can be expanded to over 10 million tonne per annum
capacity. Right from the year of its integrated operation, VSP established its presence
both in the domestic and international markets with its superior quality of products. VSP
has been awarded all the three International Standards Certificates, namely, ISO
9001:2000, ISO 14001:1996 and OHSAS 18001:1999. The company has taken
significant strides in the area of Corporate Social Responsibility.

Production Performance

(in million tonne)

Items 2004-05 2005-06 2006-07 (April-Dec06)
Hot Metal 3.920 4.153 3.040
Liquid Steel 3.560 3603 2.676
Saleable Steel 3.173 3.237 2.419


Incorporated on November 15, 1958, the National Mineral Development Corporation

Ltd (NMDC) a Government of India Enterprise, is engaged in the business of developing
and exploiting mineral resources of the country (other than coal, oil, natural gas and
atomic minerals). At present, its activities are concentrated on mining of iron ore,
diamonds and silica sand.

NMDC operates the largest mechanised iron ore mines in the country at Bailadila
(Chhattisgarh) and Donimalai (Karnataka). The silica sand project is at Lallapur,
Allahabad and the diamond mine is situated at Panna (Madhya Pradesh). Mining
activities at DMP, Panna were stopped with effect from 22.08.2005 on receipt of notice
from Madhya Pradesh Pollution Control Board. The case is pending with Honble
Supreme Court of India. NMDC is following up the case for early hearing.

All the iron ore production units have been accredited with ISO 9001:2000 and ISO
14001:2004 certifications. R&D Centre of NMDC was also accredited with ISO
9001:2000 certification.

Iron Ore

NMDC produced 17.27 million tonne of iron ore during the year 2006-07 (up to
December 2006). Domestic sales of iron ore was 15.50 million tonne during the year
(up to December 2006). Exports of iron ore produced by NMDC is canalised through
MMTC Ltd. Iron ore is exported to Japan, South Korea and China. In 2006-07, NMDC
exported 1.78 million tonne of iron ore valued at approximately Rs. 429.80 crore.

Capital Structure

The authorised share capital of the company is Rs. 150 crore. The paid up equity share
capital was Rs. 132.16 crore. Outstanding loans from Government of India are nil.
Financial Performance

The financial performance of the company for the year 2005-06 and 2006-07 (April-Dec.
06) are given below:

2006-07 (April-
Particulars 2004-05 2005-06
2226.55 3,710.92 2,790

1287.49 2,889 2,455

Gross Margin

1223.65 2,770.13 2,410

Profit Before Tax


MSTC Ltd. (formerly Metal Scrap Trade Corporation Ltd.), a Government of India
Enterprise, was set up on September 9, 1964 as a canalising agency for the export of
scrap from the country. With the passage of time, the Company emerged as the
canalising agency for the import of scrap into the country. Import of scrap was de-
canalised by the Government in 1991-92 and MSTC has since then moved on to
marketing ferrous and miscellaneous scrap arising out of steel plants and other
industries and importing coal, coke, petroleum products, semi finished steel products
like HR coils and export of primarily iron ore. The company has also established an e-
auction portal and undertakes e-auction of coal, diamonds and steel scrap and has
developed an e-procurement portal in house.

Capital Structure

The company has an authorised capital of Rs. 5 crore and paid up capital was Rs. 2.20
crore as on 31.12.2006 of which approximately 90% is held by Government of India and
balance 10% by members of Steel Furnace Association 16 of India, Iron and Steel Scrap
Association of India and others. Paid up capital of Rs. 2.20 crore includes bonus shares
issued in the year 1993-94 in the ratio 1:1.

Ferro Scrap Nigam Ltd. (FSNL) is a wholly owned subsidiary of MSTC Ltd. with a paid
up capital of Rs. 2 lakh. The company undertakes the recovery and processing of scrap
from slag and refuse dumps in the nine steel plants at Rourkela, Burnpur, Bhilai, Bokaro,
Visakhapatnam, Durgapur, Dolvi, Duburi and Raigarh. The scrap recovered is returned
to the steel plants for recycling/disposal and the company is paid processing charges
on the quantity recovered at varying rates depending on the category of scrap. Scrap is
generated during iron and steel making and also in the rolling mills. In addition, the
company is also providing steel mill services such as scarfing of slabs, handling of BOF
slag, etc.

Financial Performance

Particulars 2004-05 2005-06 2006-07 (Apr-


Total Turnover i.e, Service charges realised . 9,818.22 10,679.37 7,655.57

including miscellaneous Income,etc

Gross Margin before Interest & Depreciation 1,678.79 1,865.14 1,052.84

Interest & Depreciation 830.14 1,009.70 847.28

Profit before Tax 848.65 855.44 205.56


Manganese Ore (India) Ltd. (MOIL) was established in 1962. It is the largest producer
of manganese ore in India. At the time of inception, 49% of its shares were held by the
Central Province Manganese Ore Co Ltd. (CPMO) and the remaining 51% in equal
proportion by Government of India and the State Governments of Madhya Pradesh 17
and Maharashtra. Subsequently, in 1977, the Government of India acquired the shares
held by C.P.M.O. in MOIL and MOIL became a wholly owned Government company
with effect from October, 1977. As on 30.11.2006, Government of India held 81.57%
shares in MOIL with State Governments of Maharashtra and Madhya Pradesh holding
9.61% and 8.82% shares respectively.

MOIL Produces and Sells following Grades of Manganese Ore

High grade ores for production of ferro manganese .

Medium grade ores for production of silico manganese.

Blast furnace grade ore required for production of hot metal

Dioxide ore for dry battery cells and chemical industries.

Production and Financial Performance

The physical and financial performance of the Company during 2004-05, 2005-06 and
2006-07 (April-Dec. 2006) are given below in the table:

Items 2004-05 2005-06 2006-07 (up to


1. Production

a) Manganese Ore (thousand tonne) 943.00 865.00 825.33

b) Electrolytic Manganese Dioxide(tonne) 1,123.00 1,301.00 460.00

c) Ferro Manganese (tonne) 10,325.00 6,170.00 8,294.00

2. Turnover (Rupees in crore) 378.78 334.09 294.63

3. Profit before Tax (Rupees in crore) 202.27 169.00 120.87


Kudremukh Iron Ore Company Ltd (KIOCL), an 100% Export Oriented Unit, ISO
9001:2000 and ISO 14001 company was established in April, 1976 to meet the long
term requirements of Iran. An iron ore concentrate plant of 7.5 million tonne capacity
was set up at Kudremukh. This project was to be financed in full by Iran. However, as
Iran stopped further loan disbursements after paying US $ 255 million, the project was
completed as per schedule with the funds provided by Government of India. While the
project was commissioned on schedule, consequent upon the political developments in
Iran, they did not lift any quantity of concentrate. As a diversification measure, the
Government approved the construction of a 3 million tonne per year capacity pellet plant
in Mangalore in May, 1981. The capacity of the pellet plant was increased to 3.5 million
tonne with additions/modifications. The plant went into commercial production in 1987
and is now exporting blast furnace grade pellets to China and also to domestic units
such as Ispat Industries Ltd. and Rastriya Ispat Nigam Ltd. Aerial view of Pellet Plant,


A target of 3.1 million tonne and 3.05 million tonne was set for production of iron ore
concentrate and iron oxide pellets respectively during the year 2005-06. Actual
production was 2.922 million tonne of concentrate and 2.834 million tonne of pellets.

The target set for production during the year 2006-07 is 3.05 million tonne of pellets. In
pursuance of directive of Honble Supreme Court dated 30-09-2005, the mining
activities at Kudremukh were stopped on 31-12-2005. Therefore, there is no production
of iron ore concentrate during the year 2006-07. As against a target of 1.88 million tonne
of pellets fixed for the period April to November, 2006, the actual production was 0.275
million tonne which represents 15% target fulfilment. There is shortfall in production of
pellets up to November, 2006 during 2006-07. The shortfall in production of pellets is
on account of operational problems being encountered in the pellet plant after switching
over to usage of 100% hematite ore from magnetite ore. There was excessive
generation of su er fines (slimes) affecting filtration, clogging of filters, overflow and
contamination of process water due to filling of cooling pond affecting production. While
efforts are continuing to rectify the problems, the operation of pellet plant is yet to
stabilize and normal production is yet to commence.

The sales revenue during the last five years and up to November, 2006, during 2006-
07 is detailed below:

(Rs. in lakh)

Years Concentrate Pellets Total

2006-07 (up to December, 2006) - 12,427 12,427

2005-06 12,091 1,11,137 1,23,228

2004-05 16,050 1,69,327 1,85,377

2003-04 20,209 82,729 1,02,938

2002-03 21,135 51,579 72,714

2001-02 21,571 50,598 72,169

Financial Performance

An overview of the performance of KIOCL during the year 2006-07 (up to November,
2006) together with actuals for the previous three years, is indicated below:

(Rs. in lakh)\

Particulars 2006-07(up to 2005-06 2004-05 2003-04

December, 2006)
Total value of Sales 12,427 1,23,228 1,85,377 1,02,938

Gross Margin 2,620 68,706 1,20,863 45,945

Profit after Tax 1,029 35,630 64,984 30,070

Inventories(excluding 20,417 15,843 8,720 7,616

finished stock)


Consequent upon nationalisation of the undertaking of Bird and Company Ltd in 1980,
the following seven companies came under the administrative control of the Ministry of
Steel, Government of India:

(a) The Orissa Minerals Development Company Limited (OMDC)

(b) The Bisra Stone Lime Company Limited (BSLC)

(c) The Karanpura Development Company Limited (KDCL)

(d) Scott & Saxby Limited (SSL)

(e) Eastern Investments Limited (EIL)

(f) Burrakar Coal Company Limited (Burrakar)

(g) Borrea Coal Company Limited (Borrea)

The status of the companies is as under:

a) Burrakar and Borrea coal companies became non-operational after nationalisation of

coal mines. The two companies are in the process of liquidation. The official liquidator
has already taken over the assets and liabilities of these two companies.

b) EIL being an investment company is having a major stake in the equity shares of
operating companies under the Bird Group.
c) OMDC, BSLC, KDCL & SSL are operating companies under the Group.

Status of the Companies at the Time of Nationalisation

At the time when the Bird Group of Companies came under the administrative control
of the Ministry of Steel, Government of India, all of them were financially sick and
burdened with various problems. With the financial support from the Government of
India, problems relating mainly to excessive manpower, erosion of working capital and
outstanding liabilities could be settled to a considerable extent.


R.S. PANDEY sees a bright future for the steel industry in India provided, of course, the
iron ore mining policy to be announced by the government soon acts as a catalyst for
growth. He discusses the industry's problems and prospects in an interview. When
asked about the steel sectors i.e. private and public he expressed his expert views. The
interview was published in a magazine FRONTLINE in the December 2006.

The public sector steel companies in India are doing extremely well. And, therefore,
they will have a decisive role to play. In fact, SAIL and RINL [Rashtriya Ispat Nigam
Ltd.], which has the Vizag steel plant, have undertaken massive expansion plans.
Between 1992-93 and now, the share of the public sector in steel production had gone
down. Today, its share is 41 per cent while that of the private sector is 59 per cent. In
1992-93, the private sector had a share of only 37 per cent. In terms of finished steel,
the private sector, even in 1992-93, had a 67 per cent share and this has now grown to
71 per cent. But the public sector units are growing, even if the private sector is growing

During 2006, SAIL and RINL decided on major capacity expansion plans. SAIL is going
to increase its capacity from the current 13 million tonnes of hot metal to 22.5 million
tonnes in just four years. RINL is set to expand its capacity from three million tonnes to
6.3 million tonnes in the next three years. So that is a major expansion of capacity for
the PSUs.

The public sector should be encouraged all the more. Let there be a healthy competition
between public and private sector producers. The question of exit comes when they do
not perform. Look at the stock prices of SAIL. A few years ago, the scrip was at below
Rs.10 per share. Today, it is more than Rs.130, and the expectations are that it will go
up even higher.

When talked about the labour productivity he says, Yes, labour productivity is low, in
SAIL in particular. But it is improving. The steel major is going to adjust much of its
existing manpower in the expansion phase when its capacity is going to almost double.
The management had also undertaken a massive VRS [voluntary retirement scheme].
In RINL, labour productivity is not all that bad.

Besides, SAIL has done very well in various other techno-economic parameters in the
last two and a half years. In 2003-04, SAIL's manpower productivity was 127 tonnes per
man per year. In 2005-06, it went up to 150 tonnes per man per year, an improvement
of 20 per cent. In blast furnace productivity also, there has been an improvement, as
also in the production of high-end special steels and capacity utilisation.
With the improved turnover, which comes from higher capacity use and higher
manpower productivity, SAIL's profits have surged. Its gross profit more than doubled
between 2003-04 and 2005-06. The general presumption was that the spurt in profits
was largely due to the high prices of steel. An analysis has shown that as far as SAIL is
concerned, the higher profit is 29 per cent owing to the price factor in steel and other
input costs, and 71 per cent owing to improvement in capacity use and other factors
that are just mentioned.


To compare Private and Public steel sector with refrence to TATA Steel and Steel
Authority Of India.
To analyse potential of both the companies i.e. TATA Steel and SAIL.
To analyse measures taken by Indian government to improve the industry and
study the National Steel Policy 2005
To analyse the future of Indian steel industry.

Research Methodology
This section deals with the research design used and data collection method used.

a). Research design:-

In case of my research Comparative analysis of Indian private and Public

sectors with special reference to TATA Steel and SAIL the descriptive research is
found to be more appropriate.
Descriptive research studies are those studies, which are concerned with
describing the characteristics of a particular individual, or a group. This study is
concerned with specific prediction, narration of facts and characteristics concerning
individual, group of situation are all examples of descriptive research studies.

b). Data collection method:-

According to my topic of research I found that the use of secondary data is the only
right choice. For that I mainly used Internet and collective various data from government
and private websites.

I visited to the library and went through various books and journals for collection of
the relevant data for the research.


Comparison between TATA Steel and Steel Authority of India

The Public sector undertakings (PSUs) under the Ministry of Steel have shown
significant improvements in the last two years. The combined profit before tax of all 15
PSUs of the Steel Ministry exhibited an enhancement of more than two times, from Rs.
5,568 crore in fiscal 2003-04 to Rs. 11,497 crore in 2005-06.
The profit before tax for all PSUs also exhibited a significant improvement of
around 26% in the three quarters of 2005-06 (April-December 2006) amounting to
Rs.10,566.40 crore as against a combined profit before tax of Rs.8,368.75 crore in the
comparable period of last year.
Contribution of PSUs to public exchequer has also gone up significantly. For
example, the contribution of five leading companies, namely, SAIL, RINL, NMDC,
KIOCL and MOIL, to Central and State exchequer by way of excise duty, customs duty,
dividend, corporate tax, sales tax, royalty etc. has gone up by more than double, from
Rs. 5,761 crore in 2003-04 to Rs.13,110 crore in 2005-06.
On the other hand, the Private sector of the Steel Industry is currently playing an
important and dominant role in production and growth of steel industry in the country.
During the period (April-December 2006), 20.5 million tonne of steel was produced by
Private Sector steel units, out of the total production of 33.15 million tonne in the country.
The private sector units consist of major steel producers in one hand and relatively
smaller & medium units such as Sponge iron plants, Re-rolling mills, Electric Arc
Furnaces and Induction Furnaces on the other. They not only play an important role in
production of primary and secondary steel, but also contribute substantial value addition
in terms of quality, innovation and cost effectiveness.

For comparing both the companies i.e. Tata Steel and SAIL lets analyse both the
companies on following parameters:

Chart showing production of both the companies:

Quantity : '000 Tonnes

2007-08 APR-DEC'07
DEC'07 DEC'06 APR-
i)BSP 4950.0 3711.0 3732.0 3578.0 100.6 104.3 127.0 121.0
ii)DSP 1840.0 1358.0 1433.0 1345.0 105.5 106.5 106.0 99.0
iii)RSP 1813.0 1345.0 1536.0 1512.0 114.2 101.6 108.0 106.0
iv)BSL 4350.0 3263.0 3097.0 3001.0 94.9 103.2 95.0 91.0
v)ISP 500.0 376.0 352.0 345.0 93.6 102.0 94.0 92.0
vi)ASP 147.0 107.0 114.0 113.0 106.5 100.9 65.0 64.0
139.0 105.0 116.0 119.0 110.5 97.5 130.0 134.0
TATA 5000.0 3744.0 3709.0 3738.0 99.1 99.2 99.0 100.0

TATA Steel :
The company had a Production target for the year 2007-08 was 5 million tonnes (mT)
but it could produce only 4.93 (mT). For the first 3 quarters of the years company set a
target of 3.744 (mT) but could produce 3.709. However for the same period in last year
company produced 3.738 (mT) steel a capacity utilisation of 100% as compared to 99%
this year.

Steel Authority of India :

The company had a aggregate production target of 13.739 (mT) for the year 2007-08
but it could produce only 12.6 (mT) a growth of 4% over the previous year. However for
the first 3 quarters of the years company set a target of 10.265 (mT) and produced
10.380 as compared to around 10 (mT) for the same period last year. SAIL had a
capacity utilisation of 103% this year as compared to 101% last year.


TATA Steel :
The year 2006-07 has seen the highest turnover and profits, continuing the trend
of the past four years. The Company achieved the best ever sales turnover and
profitability during the year under review. A robust Indian economy, firm steel prices,
higher volumes and several improvement initiatives contributed to the record
performance. Finished steel sales were higher by 11.33% at 4.51 million tonnes over
the previous year. Export turnover was lower by about 5% due to lower volumes.
Average price realisation improved mainly due to higher prices of hot rolled coils/sheets.
Operating profit was higher by over Rs. 1,000 crores at Rs. 6,973 crores (2005-06: Rs.
5,938 crores), an increase of 17% over the previous year.
Net interest charges were higher at Rs. 174 crores (2005-06: Rs. 125 crores), due
to additional borrowings for the Companys domestic expansion programs and funding
Companys contribution for financing the acquisition of Corus Group plc. After providing
for Rs. 819 crores for depreciation (2005-06: Rs. 775 crores) and Rs. 152 crores
towards employee separation scheme (2005-06: Rs. 53 crores), the profit before tax
rose by 20% to Rs. 6,262 crores (2005-06: Rs. 5,240 crores). Net Profit after taxes was
higher at Rs. 4,222 crores (2005-06: Rs. 3,506 crores), an increase of 20% compared
to the previous year.

The record financial results would not have been possible without a matching
performance by the operating departments including the raw materials division. The
year witnessed the best ever crude steel production by the Company at 5.05 million
tonnes, an increase of 6.7% over the previous year. Jamshedpur Plant became the first
plant in India to produce more than 5 million tonnes of crude steel in a year. The
upgraded G Blast Furnace produced over 2 million tonnes of hot metal, as against its
rated capacity of 1.8 million tonnes. Among the Finishing Mills, the output at the Cold
Rolling Mill and the Hot Strip Mill exceeded their rated capacities. The all-round increase
in production was backed by improvements in operating practices and productivity
resulting in a reduction in consumption of raw materials, energy, refractories etc.

Steel Authority of India:

Financial Year 2006-07 has been eventful year for the company with further
momentum in improving operational efficiencies, laying strong foundation and building
road map for modernisation and expansion of SAIL Plants, with several new initiatives
undertaken, with its human resource at the core. During the year, the company got the
distinction of first metal company in the country to reach a market capitalization of Rs.
50,000 crore.
There have been improvements in all financial parameters which are shown in the
table given below-
SAIL set new record in achieving the turnover of Rs.39,189 crore and profit before
tax of Rs.9423 crore, registering growth of 21% & 65% respectively over previous year.
The company recorded net profit after tax (PAT) of Rs.6202 crore, an increase of 55%.

Research and Development

Chart showing production of both the companies:

(Rs. Crore)

TATA Steel :
The R & D laboratory was set up in 1937. Today, Tata Steel is the first in India to
develop galvannealed skin panels. It is the only Indian supplier of bake hardening steel
for body panels.
Research is undertaken at Tata Steel in the areas of raw materials including coal,
coke, energy conservation, waste utilisation, sintering, blast furnace productivity and
phosphorous reduction, product development and improvement in life of plant and
machinery. The Company spends 7% of its turnover for R&D 17 patents have been
sealed and over 100 are in process

Steel Authority of India :

Research and Development Centre for Iron and Steel (RDCIS) has provided
innovative technological inputs to different units of SAIL, with special emphasis on cost
reduction, product development and application, quality improvement, energy
conservation and automation. Several new products were developed and
commercialised like DMR 249 Gr. A at Bhilai Steel Plant (BSP), Bokaro Steel Plant Steel
(BSL) and Rourkela Steel Plant (RSP), Spade M-1 steel as per CDA 99 specification at
RSP, Fe 415 Gr. Thermo Mechanically Treated (TMT) rebar with micro-alloying at BSP,
high strength corrosion resistance roof bolt grade bars at Durgapur Steel Plant (DSP),
earthquake resistant TMT rebars (Fe-415) at DSP, Cu-Mo pearlitic rail at BSP, high
strength micro alloyed rails at BSP etc. The RDCIS strengthened its technology
marketing efforts by providing consultancy services, organising specialised testing and
transfer of technological innovations to outside customers like M/s Power Grid
Corporation of India, Gurgaon; M/s Refcom (India) Pvt Ltd., Purulia (West Bengal); M/s
Sarvesh Refractories, Rourkela; M/s Balmer Lawrie Ltd., Kolkata, and M/s Monarch
Electronics, Kolkata, etc.
During the year, 1998 technical papers were published/presented, besides filing of
31 patents and 29 copyrights. The scientists at the RDCIS won nine national level
awards. In addition, RDCIS won the prestigious DSIR National Award 2005 for R&D
achievements in New Materials given by the Ministry of Science and Technology,
Government of India.

TATA Steel:

Tata Steels efforts at Environment Management are well recognised. Its Steel
Works in Jamshedpur, all its mines, collieries and manufacturing divisions in its out has
an ISO-14001 certified service provider.locations are certified to ISO-14001.
Jamshedpur is the only town in the country which

Significant achievements by the Company include an improvement in environment

and resource conservation, including a reduction in green house erosion, raw materials
and water consumption. The Company has increased waste re-use and re-cycling.
Constant upgradation and modernisation has resulted in several state-of-the-art
pollution control systems being installed to prevent and control pollution. The Company
has almost doubled its capital investment in Pollution Abatement in the last five years.

Emissions, effluents and wastes

Greenhouse Gas (GHG): Of the six Greenhouse Gases, Carbon Dioxide is of most
relevance to the steel industry. Considerable reduction has been effected by Tata Steel
in the Carbon Dioxide emission rate, as is evident when the credit for slag granulation
is taken into account. Other Greenhouse Gas emissions do not result from Tata Steels

Ozone depleting substances: The Steel Works reduced use of refrigerants to 7.044
tonnes in 2003-04 as against 7.90 tonnes used during the previous year.

Hazardous Waste under Basel Convention: The Company does not import or export
any waste, deemed hazardous under the Basel Convention. All hazardous wastes
generated are handled as per the requirement of the Hazardous Waste Management
and Handling Rules 1989/2000.


Tata Steel has undertaken several initiatives, which have resulted in considerable
reduction in stack emission. Emissions are well below the Indian and international
standards. The emission load including particulate matter, Sulphur Dioxide and Oxides
of Nitrogen have dropped as a result of the improvement initiative undertaken at the
Steel Works.

Waste handling

Most of the solid waste generated from Steel Works is recycled or reused. 18% of
the solid waste generated, amounting to approximately 5,50,000 tonnes in 2003-04 was
used to fill low-lying areas and for peripheral road construction around Jamshedpur.
About 2,00,000 tonnes of fly ash and bottom ash, generated in the power plants was
dumped in a designated dump area.

Effluent Management

Waste water from the steel making process is being treated with best available
physio-chemical methods as well as being recycled. Waste water from the coke plant is
treated biologically where organic pollutants are oxidised and decomposed by micro
organisms. The Company has reduced the levels of total pollutant discharge in waste
water streams from 0.211 in 1999-2000 to 0.178 in 2003-04.

Steel Authority of India :

Corporate environmental policy of SAIL emphasises conducting operations in an

environmentally responsible manner to comply with applicable regulations and striving
to go beyond. SAIL recognizes its responsibility to continuously improve its energy
efficiency and optimize resource consumption through various measures viz.
improvement in process technology in the areas of raw materials, coke, iron and steel
making, reuse/recycle of the by-products generated and conservation of energy and

Solid Waste Management

During 2005-06, SAIL produced approximately 13.4 million tonne of crude steel
and generated 5.6 million tonne of Blast Furnace (BF) slag, 1.3 million tonne Steel
Melting Shop (SMS) slag and 0.6 million tonne of other process wastes. Utilisation of
these wastes are being made through internal recycling and selling to outside agencies.
The wastes generated in the steel plants are being utilized mainly through their Sinter
plant. SAIL plants have achieved 70% utilisation of solid wastes generated during April-
September, 2006.

Environmental Plantation

Trees have a significant role in protection of environment and ecological balance.

Extensive afforestation programme are being followed in all the plants and mines. The
basis of choosing the species of plants mainly depends on local soil characteristics and
prevailing meteorological conditions. The green belt developed by afforestation adds to
the aesthetic environment, which becomes dust and noise barriers.

A total number of 1,45,521 saplings have been planted covering an area of 63.7
hectare in 2005-06 as against 77,242 nos of saplings planted in an area of 36.6 hectare
in 2004-05 in and around the steel plants of SAIL.

Environmental Recognitions

SAIL plants have been awarded various prizes for environmental management in
their plants viz. Sustainability prize in independent unit category, 2006 instuted by the
Confederation of Indian Industries (CII) for exemplary performance in the
environmental, economic andsocial dimensions of sustainable development and the
Greentech Environment Excellence Gold Award,Golden Peacock Environment
Excellence Award in the metal sector, 2005 instuted by the World Environment
Foundation and the Jawaharlal Nehru Memorial Pollution Control Excellence Award for
2005 from International Greenland Society.
Workforce and Welfare of Society

TATA steel

Tata Steel has not lost focus of this philosophy and has adapted it in a broader
and modern context in its Vision 2007: A lot is dependent on the individual spirit and
enthusiasm of the employees to realise our vision. TATA Steel accelerates efforts to
provide a work environment that will ensure a sense of purpose and personal growth
for each individual. The wish of the company is to see the smile on every face everyday.
A pioneer in employee welfare, Tata Steel has invested in the power of its people and
enriched, empowered and enhanced their lives.

Even in its nascent years, social scientists Sidney and Beatrice Webb were
brought in to work on welfare schemes. In fact, some of the initiatives introduced by
Tata Steel were the first of their kind in India and some even in the western countries at
that time! Tata Steels Human Resource policy recognises its people as the primary
source of its competitiveness. It focuses on constantly updating and challenging
intellectual capabilities to enable them to excel in performance. Special efforts are made
for enhancing strategic thinking skills and analytical abilities of its managers and
workers. As a true Learning Organisation, Tata Steel has tapped the knowledge
available with its people through Knowledge Management and sharing of best practices.

In the year 2003, Tata Steel celebrated 75 years of industrial harmony and mutual
co-operation, coordination and understanding between the Management and the Union.
It has twice emerged as Asias Most Admired Knowledge Enterprise among many
other prestigious awards and recognition. Tata Steel aims at ensuring transparency,
fairness and equity in all its interactions with its employees to create an enthused and
happy workforce.

In 1916, Social Welfare Scheme was formed by Tata Steel to provide assistance
in the fields of education, vocational training, self-employment and family welfare
Tata Steel has hosted the Lifeline Express, the worlds fi rst hospital on a train,
12 times. This facility provides on-the-spot diagnostic, medical and advanced
surgical treatment for preventive and curative interventions to people in
inaccessible rural areas.
Sir Dorab Tata personally financed four athletes and two wrestlers from India for
the 1920 Antwerp Olympics!
The JRD Sports Complex, an international stadium with an 8-lane polyurethane
track, was inaugurated in 1991. The complex also houses facilities for handball,
tennis, volleyball, hockey, basketball, boxing, table tennis and a modern
The Tata Steel Family Initiatives Foundation is engaged in off ering health
services for the betterment of the people in and around Jamshedpur.
At times of natural calamities, the company has rushe immediate relief and off
ered long-term assistance to tsunami-hit Tamil Nadu, earthquake-torn Gujarat, fl
ood ravaged Orissa and other such aff ected areas.
Horse-riding lessons, the Jubilee Amusement park, the zoological park, etc. off
er a unique environment for the children of Jamshedpur to grow up in.
In a recent survey conducted on Quality of Life by AC Nielsen ORG-MARG,
Jamshedpur has emerged as the one of the best cities in India.

Steel Authority of India :

The manpower strength as on 31st March, 2006 was 1,38,211 comprising 15,206
executives and 1,23,005 non-executives. The total reduction in manpower achieved
during the year stood at 4,864, which included separation of 881 employees through
voluntary retirement. The labour productivity improved by around 12% over previous
year to 150 tonne crude steel/man/year.
Some of the areas of assistance, which are available to the weaker sections, are the
The company has provided land for construction of school buildings in some of
the steel townships as well as in other places for spreading education among the
The company has constructed roads in remote areas around the steel plants and
also where the captive mines are located to improve communication and also
increase activities such as organisation of health camps, school facilities,
drinking water etc., under the peripheral development schemes.
Bhilai Steel Plant has adopted 36 tribal children of Chattisgarh region and Bokaro
Steel Plant has adopted 12 Birhor tribe children. These plants are providing them
with education, boarding and lodging facilities.
Construction of bridges, by-pass roads, metal-morum path, waterways,
levelling/dressing area around township, pre-mixed roads. Installation of hand-
pumps, tube wells and wells for villagers.
Construction of school buildings (including for mentally retarded, deaf and dumb
children), madarsas, providing school furniture therein and construction of
hostels, womens college building etc.
Fourteen scholarships are awarded to deserving SC/ST undergraduate
engineering students in various disciplines to encourage technical education
among them
In many cases, tuition fee in company run schools is exempt for SC/ST students.
Steps are taken to provide education to more and more tribal children in company
The unemployed SC/ST youth are given specialized training in various technical
trades to develop skill and knowledge. Such training is provided free of cost.
Adult literacy campaign is carried out in most of the steel townships. Every year
more and more men and women are being covered in this campaign.
Development of fishery and cottage industry, providing sewing machines to
village mahila mandals and promoting other self-employment generation
SAIL has established a hockey academy with stadium and hostel facilities at
Rourkela to tap and nurture the talent scattered in surrounding tribal area. The
academy was successful in spotting a number of young talented tribal players
and grooms them under expertise of ex-Olympian.


The biggest boost to efficiency in the steel industry has come from the increased
use of continuous casting an indicator of the modernity of the production process. Its
share of Indian crude steel output has climbed from 38% in the mid-1990s to 66% now.
India is thus well on its way to joining the ranks of the leading steelmakers among the
industrial nations (share in EU-25: 96%). However, in India some 6% of crude steel is
still made using the outdated open-hearth process (EU-25: 0.3%), which suggests there
is restructuring potential.

TATA Steel

Tata Steel's stall at the International Trade Fair was adjudged the best, along with
SAIL, amongst ninety national companies participating in the Trade Fair. Thirty
international companies also took part in the exhibition. Participating companies from
countries all over the world exhibited latest technologies and know-how. List of
participating companies included Baosteel, SAIL, Heavy Engineering Corporation,
Hindustan Copper, Jindal Steel & Power, M.N. Dastur & Co. MECON and other such
companies of national and international repute. China was the partner country for the
International Trade Fair this year.
In the award winning exhibition, Tata Steel showcased its best coal mining practices,
cutting-edge technology used in iron ore mining, pioneering human resource practices,
78 years of industrial harmony and various other aspects of the world's best steel
The 6th International Trade Fair and Conference, an institutionalised global event,
is considered to be one of the most prestigious forums for national as well international
participants. It is a conclave of the finest minds concerned with the future direction and
growth of these sectors. The forum provided the world's most eminent metallurgist's,
manufacturers of metallurgical and mining machinery and related sector's
professionals, analysts and experts with the opportunity to exchange views on emerging
technologies, synergy and strengths and open up wider horizons for sectorial
Tata Steel to adopt Corus technology:
Tata Steel plans to implement alternate technology used by the British steel maker
Corus, which it acquired recently, in its greenfield steel plants to reduce cost of
production, according to Mr B. Muthuraman, Managing Director, Tata Steel.
We are looking at alternate technology. Corus has developed an alternate technology,
which could be implemented in our greenfield plants, Mr Muthuraman told
newspersons on the sidelines of the 34th National Management Convention organised
by the All-India Management Association. However, he declined to give further details
on the type of technology the Indian steel giant plans to implement.

Steel Authority of India :

Modernisation holds the key to SAIL's fortunes in the near future. The objective of
the Rs.15,000-crore modernisation drive is to upgrade steel-making technologies and
productive capacity and, in the process, become more energy-efficient and improve
quality. The key component of the ongoing modernisation drive - already completed at
Rourkela and Bokaro - is the replacement of open hearth furnaces and ingot casting
facilities with basic oxygen furnaces for steel-making and employing continuous casting
techniques. A senior SAIL official says, "Continuous casting and basic oxygen furnaces
ensure better quality steel through processes more easily monitored for quality control.
The basic oxygen surfaces method is significantly faster, more automated and permits
greater flexibility. Continuous casting is more efficient than the traditional ingot casting
methods and gives increased yields while enabling better quality standards. SAIL is also
modernising its finishing mills and is adding secondary refining facilities to improve

Safety measures

A unique feature of safety management in steel industry is that a bipartite forum

named Joint Committee on Safety, Health and Environment in Steel Industry (JCSSI)
was formed in 1973 at national level having representatives from steel plants in SAIL,
RINL, TISCO and Ispat Group. All the Central Trade Unions are represented on this
Committee. With a view to inculcate safety consciousness, JCSSI organises seminars,
workshops, training programme, safety competitions for member organisations. JCSSI
with the co-operation and support of Trade Union representatives formulates policies
and guidelines for its member plants and monitors the implementation.

Tata Steel :
Safety has always been a prime focus at Tata Steel. A Safety Committee, a Safety
department and a Safety Trophy helped spread the message all across the company.
TATA reaffirms its commitment to provide safe working place and clean
environment to its employees and other stakeholders as an integral part of its business
philosophy and values. We will continually enhance our Environmental, Occupational
Health & Safety (EHS) performance in our activities, products and services through a
structured EHS management framework. Towards this commitment, we shall;

Establish and achieve EHS objectives and targets.

Ensure compliance with applicable EHS legislation and other requirement and
go beyond.
Conserve natural resources and energy by constantly seeking to reduce
consumption and promoting waste avoidance and recycling measures.
Eliminate, minimize and/or control adverse environmental impacts and
occupational health and safety risks by adopting appropriate "state-of-the-art"
technology and best EHS management practices at all levels sand functions.
Enhance awareness, skill and competence of our employees and contractors so
as to enable them to demonstrate their involvement, responsibility and
accountability for sound EHS performance.

Steel Authority of India :

SAIL has a separate corporate unit, called the SAIL Safety Organisation to monitor
safety system & activities- SAIL also has a comprehensive safety policy:
Annual Performance Plans (APP) for the areas of safety and fire services are
formulated and review of implementation of APP is done during Heads of Safety
Internal and external safety audits of major departments particularly hazardous
areas are conducted every year and points arising from these audits are
liquidated. Safety aspects have been incorporated in standard operating
practices (SOP) and standard maintenance practices (SMP).
All major capital repairs/shut downs are closely monitored round the clock.
Periodic drives are conducted to inculcate safety awareness/culture up to grass-
root level apart from regular inspections as per checklists to identify unsafe
Safety training is imparted to target group employees at various levels. HRD
intervention in the area of safety covers Heads of Departments, Line Managers
& Departmental Safety Officers. Besides area specific workshops are conducted
at different locations on important topics like gas safety, rail/road safety, safety
in iron, steel & coke making etc.

Consistent efforts were made by SAIL Safety Organisation for improving safety
standards in the company by taking measures like intensive safety drives in works area
and conducting safety audits in hazardous departments of different plants and mines.
In addition, specific workshops on safety aspects were organised in various SAIL steel

Measures taken by Indian government to improve the industry

Now lets have a look over what government has done to make the industry
competitive in world market. Government has taken several initiatives in last decade to
improve the steel industry. The main steps taken for this are as follows-

1. In the new Industrial Policy announced in July, 1991 Iron and Steel industry,
among others, was removed from the list of industries reserved for the public
sector and also exempted from the provisions of compulsory licensing under the
Industries (Development and Regulation) Act, 1951.
2. With effect from 24th May 1992, Iron and Steel industry has been included in the
list of `high priority' industries for automatic approval for foreign equity investment
up to 51%. This limit has been recently increased to 100%.
3. Price and distribution of steel were deregulated from January 1992. At the same
time, it was ensured that priority continued to be accorded for meeting the
requirements of small scale industries, exporters of engineering goods and North
Eastern Region of the country, besides strategic sectors such as Defence and
4. The trade policy has been liberalised and import and export of iron and steel is
freely allowed. There are no quantitative restrictions on import of iron and steel
items, covered under Chapter No. 72 of the ITC(HS) Code. The only mechanism
regulating the imports is the tariff mechanism. Tariffs on various items of iron and
steel have drastically come down since 1991-92 levels and the government is
committed to bring them down to the international levels. In Chapter 72 there are
two items viz. 72042110 and 72042910, which fall in the restricted list of imports.
5. Iron & Steel are freely importable as per the Extant Policy.
6. Iron & Steel are freely exportable.
7. Advance Licensing Scheme allows duty free import of raw materials for exports.
8. The floor price for seconds and defectives continues till date.
9. Imports of seconds and defectives of steel are allowed only through three
designated ports of Mumbai, Calcutta and Chennai.
10. Mandatory pre inspection certificate by a reputed international agency for every
import consignment of seconds and defectives.
11. In budget 2004-05, the customs duty on nonalloy steel was reduced from 15 % to
10 per cent and on alloy steel from 20 per cent to 15 per cent. In August 2004, the
customs duty on non-alloy steel was further reduced from 10 per cent to 5 per cent;
on meltingscrap from 5 per cent to 'zero' and on ships for breaking from 15 per
cent to 5 per cent.
12. Further, customs duty on several raw materials used by the steel sector like
noncoking coal, metcoke and nickel has been reduced to 5 per cent and on coking
coal to 'zero'.
13. To bring down the prices of steel, the excise duty on steel products was reduced
from 16 per cent to 8 per cent with effect from February 28, 2004 with a caveat
that the duty regime will be reviewed. Budget 2004-05 revised this partially by
increasing the duty from 8 per cent to 12 per cent, as the intended impact of duty
cut on moderating prices was not achieved.
14. The union Budget 2007-08 the import duty on seconds and defective has been
further reduced from 20% to 10%.

Special assistance being provided by Ministry of Steel to Private Sector

1. Ministry of Steel is extending all possible support, as detailed below, for the
development of Iron and Steel Sector in the country:
2. The Ministry is providing linkage for raw materials, rail movement clearance etc. for
new plants and expansion of existing ones, wherever applied for.
3. To ensure an un-interrupted supply of raw materials to the producers.
4. The Ministry has been interacting with All India Financial institutions to expedite
clearance of projects.
5. Regular interactions with Entrepreneurs, who are proposing to setup Iron and Steel
Plants, are held at the level of Secretary.
6. Ministry of Steel identifies infra-structural and related facilities required by steel
industry so that their absence does not lead to bottlenecks in the future growth of
the Iron and Steel Sector, and takes up these issues with the concerned ministries.
7. The Ministry has encouraged the setting up of "Institute for Steel Development and
Growth (INSDAG)" in Calcutta in August, 1996. The leading steel producers in the
country are members of this Institute, which has been set up with the objective of
promoting, developing and propagating the proper and effective use of steel.
8. In order to resolve the problems faced by existing & new steel plants & to assist
major steel plants being implemented, Govt. has setup a Project Coordination Group
under the Chairmanship of Steel Minister.

The progress of the steel industry has a critical influence on the pace of Indias
development and, as such, great importance is attached to capacity expansion in line
with expected demand at cost and prices which make Indian steel internationally
competitive. The existing regime of liberalization, decontrol and deregulation of industry
in the country has opened up new opportunities for the expansion of the steel industry.
With a view to accelerating the growth of the steel sector and attaining the vision of India
becoming a developed economy by 2020, the Ministry of Steel formulated a National
Steel Policy (NSP) in 2005.

The following salient features can be derived after analysing the NSP 2005:

The NSP sets out a broad roadmap for the Indian Steel Industry in its journey
towards reform, restructuring and globalisation.
The long-term goal of the NSP is that India should have a modern and efficient steel
industry of world standards, catering to diversified steel demand. The focus of the
policy is to achieve global competitiveness not only in terms of cost, quality and
product-mix but also in terms of global benchmarks of efficiency and productivity.
In order to achieve the goal of 110 million tones of steel production by 2019-20, the
NSP seeks to remove the supply-side constraints to the growth of this industry in an
open, globally integrated and competitive environment.
The NSP seeks to adopt a multi-pronged strategy to move towards the long-term
policy goal. On the demand side, the strategy would be to create incremental
demand through promotional efforts, creation of awareness and strengthening the
delivery chain, particularly in rural areas. On the supply side, the strategy would be
to facilitate creation of additional capacity, remove procedural and policy bottlenecks
in the availability of inputs such as iron ore and coal, make higher investments in
R&D and encourage the creation of infrastructure such as roads, railways and ports.
The NSP acknowledges the low per capita consumption of steel in the country,
especially in the rural areas and the need to boost steel consumption to improve
quality of life and help in meeting the growing aspirations of masses.
In order to achieve the strategic goal of 110 MT of steel production by 2019-20, the
industry would need additional capital. In addition, funds would be required for
technological upgrade of existing facilities. In order to mobilize such vast resources
NSP seeks to encourage foreign direct investment. In addition, the policy also seeks
to make the fiscal incentives, available to infrastructure projects, accessible to the
steel industry.
The NSP seeks to support developing of risk-hedging instruments like futures and
derivatives to contain price volatility in the steel market.
The NSP seeks to strengthen the existing training and research facilities available
to the domestic steel industry so as to provide suitable training programmes
especially for the secondary small-scale units and also to collect and analyse data
on important parameters of the industry.
The NSP seeks to mount aggressive R&D efforts to create manufacturing capability
for special types of steel, substitute coking coal, use iron ore fines, develop new
products suited to rural needs, enhance material and energy efficiency, utilize waste,
and arrest environmental degradation.
The NSP acknowledges the important role played by the secondary steel sector in
providing employment, meeting local demand of steel in rural and semi-urban areas,
and meeting the countrys demand of some special products and seeks to
endeavour to provide the necessary feedstock to these units at reasonable prices
from major plants through the existing mechanism of State Small Industries
The NSP recognizes the fact that integration of the Indian steel industry with the
global economy requires that the industry should be protected from unfair trade
practices. The NSP, therefore, envisages institution of mechanisms for import
surveillance, and monitoring export subsidies in other countries.

The present per capita consumption of steel in the country is very low compared to the
world average. As mentioned above, one of the objectives of the NSP is to augment the
demand and consumption of steel in the country by conscious promotion of steel usage.
With a view to create a mass awareness campaign on conscious promotion of steel
usage a Steel Promotion Coordination Committee has been formed under the
Chairmanship of Secretary, Ministry of Steel, consisting of major steel producers. The
Committee is being serviced by Institute for Steel Development and Growth (INSDAG).
The objective of the Committee is to promote steel usage in the country by way of an
awareness campaign with particular emphasis on rural sectors. The Committee also
aims at educating the designers, architects, builders and planners regarding the
qualitative and cost effective applications of steel in various structures including
buildings, bridges, flyovers and airports.


India is amongst a few countries in the world having the dual advantage of fast
growing domestic demand coupled with access to raw materials. Further, the trend that
is already discernible is that the axis of global steel production / consumption is shifting
towards Asia. With their large populations, China and India already account for 35 % of
the total world steel production - more than double of Europe. Asia is expected to
outpace other regions of the world to an even greater extent in the coming years.

Amongst the Asian nations, China has established a huge, unbridgeable lead. It is
accepted that China will continue to be the leader. However, India is slated to emerge
as the second Asian giant in the next eight years. Figuratively speaking, while the
"Dragon" has reached maturity; the "Lotus" is about to bloom in resplendent splendour.
In 2005 Chinese steel consumption was around 320 million tonnes; i.e China swallowed
almost 32% of global steel. It is unlikely that future production and consumption would
continue to flourish at growth rates of 8% and 18% respectively as has been the case
over the last few years. On the other hand, it is sun-rise time for India where the demand
has increased by 7-8% in the last couple of years. In the long run, Indian steel is likely
to be more cost-effective since unlike China, India has relatively large reserves of iron
ore (14 billion tonnes), which if strategically exploited, can sustain domestic production
of 120-130 million tonnes for at least 25-30 years.

However, the position with coal is not so favourable. Though thermal coal reserves
of over 92 billion tonnes can fuel industry, large-scale iron making using the traditional
blast furnace route would require coking coal. India does not have adequate reserves
of coking coal; nor is the meagre amount available of appropriate quality. Thus, the steel
industry always had to contend with the dual problems of inadequate availability and
poor quality of Indian coking coal. This has been partly addressed by adopting
alternative iron making processes that are not dependent on coking coal; it can not be
denied that coal is the biggest cause for concern for bulk steel production in India.

Because of the shortage of indigenous coal, attempts have been made by steel
producers to ensure long-term supplies by tying up with global majors or by acquiring
mines in other countries. This is the only long-term solution, but with a global shortage
of coal it may not remain cost-effective in the long run.

India is the seventh largest producer of steel and may further improve its position
going by the current trends. A series of investment decisions by major domestic players
and international steel giants such as Steel Authority of India Ltd, Tata Steel, POSCO,
the LN Mittal Group etc. clearly establish that such hopes are well founded. The keen
interest shown by various prospective investors is not only due to expectations of strong
growth in domestic demand but also due to indigenous availability of key resources like
iron ore and skilled workforce.

After deregulation (from 1991-92 to 2004-05) domestic consumption of finished

steel has grown at a CAGR of 6.7 per cent. In absolute terms the consumption of
finished steel expanded from 14.8 million tonnes in 1991-92 to 34.4 million tonnes in
2004-05. During the recent upturn (from 2002-03 to 2005-06) the growth in consumption
has accelerated to 9.1 per cent.

With the likely growth of Indian economy at around 7 per cent per annum, demand
for steel is expected to remain strong and is projected to reach a level of 90 million
tonnes by 2019-20 as envisaged in the National Steel Policy. This growth in demand is
sustainable considering the fact that India's per capita consumption of steel is still very
low at 31 kgs per head compared to the world average of 145 kgs. The very low level
of per capita consumption of steel in India is highlighted further when compared with
the consumption levels of its peer group consisting of countries like China, Brazil,
Mexico and Republic of Korea as also with selected developed countries.

Though there are realistic constraints in India to achieving as rapid a growth as in

China, there seems to be consensus among analysts that India is likely to witness a
growth rate in steel consumption higher than the historically observed rate of 6 to 7
percent. If the growth rate (9 per cent) of last three years is maintained then we will
achieve the 110 million tonnes landmark even by 2018. Though some analysts are more
conservative due to cyclicity of steel business, it may be mentioned that in a country like
India cyclicity is more in terms of prices rather than volumes of production.


Similar optimism prevails with regard to export of iron and steel. Export of steel
starting from a negligible amount in 1991-92 has increased to 5.5 million tonnes in 2003-
04. Exports in 2004-05 were lower at 4.6 million tonnes, primarily because of rising
domestic demand and low capacity additions. Exports now constitute around 17 per
cent of total production and India's presence in the developing and developed world is
being increasingly felt. Indian steel producers have recently been able to supply
specialized grades and products used for sophisticated applications like automobiles.
On the cost front, some of our producers are counted amongst the least cost producers
of the world. For an average reference plant, India is competitively placed in the middle
of the hierarchy of steel producing nations.

However, we have a long way to go to catch up with the leading exporters of the
world such as Japan, the CIS countries, Brazil etc. It is, however, expected that by 2019-
20 India will be able to export around 26 million tonnes of steel representing 24 per cent
of total projected production. The projected export ratio compares well with the current
worldwide export ratio of 27 per cent (excluding intra-regional trade).

The projected production of steel by 2019-20, to meet the domestic and export
demand will be around 110 million tonnes. Management of resources and infrastructural
growth is going to be critical in achievement of the production level envisaged. The
broad requirements of various resources will increase manifold from the current level.
The bottlenecks in availability of critical inputs and various facilities need to be removed
through concerted efforts of Government and industry. The broad strategy to overcome
these constraints as well as meet the strategic goals of the steel sector has been
discussed in the National Steel Policy, which has been recently approved by the

As stated earlier, the long-term goal of the National Steel Policy is that India should
have a modern and efficient steel industry of world standards, catering to a diversified
steel demand. The focus of the policy is to achieve global competitiveness not only in
terms of cost, quality and product mix but also in terms of global benchmarks of
efficiency and productivity. The policy envisages adopting a multi-pronged strategy to
achieve these goals. On the demand side, the strategy would be to create incremental
demand through promotional efforts, creation of awareness and strengthening the
delivery chain, particularly in rural areas. On the supply side, the strategy would be to
facilitate creation of additional capacity, remove procedural and policy bottlenecks in
the availability of inputs such as iron ore and coal, make higher investments in R&D and
HRD and encourage the creation of infrastructure such as roads, railways, and ports.
The production figures, exports and imports of finished carbon steel and pig iron,
and apparent consumption patterns of finished carbon steel as indicated by TATA Steel
and SAIL attest to the continuing growth for both the sectors.


The Indian steel industry responded enthusiastically to the liberalization and large
capacities were created in the private sector. The plants which came up post 1991, like
Vizag Steel (RINL) in the public sector and Essar Steels, Ispat Steels, Jindal
Vijayanagar etc. in the private sector used the modern state-of-the-art technologies.
However, because of decontrol, removal of duty protection, free import, dumping from
China and CIS, and, above all, a global economic melt-down in the latter half of 90s,
the industry went through a major crisis. The period from 1997-2001 marked the worst
for the industry with price decline, poor capacity utilization, inventory pile up, dumping
through unofficial channels and high interest burden.

Meanwhile, the industry is already into an expansion mode with all steel majors
like SAIL, Tata Steels, RINL, Ispat, Jindals and Essar hiking their capacities. States like
Orissa and Jharkhand, rich in iron ore, are attracting major investment interest both from
domestic and international majors. There is, however, some concern regarding the
differential treatment meted out to overseas players to attract investment, mainly in
respect of export of iron ore. In the final analysis, the industry scenario is expected to
radically alter in the coming years.

However, the public sector is expanding its capacities but, it has more potential
lies within to perform more than that.
Utilization of capacities in public sector is more than that of private sector but the
performance still has to be improved.
Public sector has increased its profit over the year particularly in 2006-07.
Both the companies are planning to adopt modern technology which is going to
help them to compete in world market but they need to be less dependent on
state of art technology and coal for long term prospects.
Public sector has undergone retrenchment for the employees and improved has
its lobour productivity but it is still lacking behind as compared to private sector.
SAIL has reduced the no. of accidents due to improper handling of machinery
still no of accidents are more than that of TATA Steel.
Most of the plans to achieve the significant position in world market will remain
on paper unless adequate attention is given to augmentation of infrastructure i.e.
roads, ports, railways, power, etc.

These areas are of prime concern and the policy envisages a High Level Monitoring
Group which will not only prepare action plans in consultation with the concerned
Ministries but also coordinate development of the required facilities. There are
tremendous challenges ahead of us but these have to be met comprehensively if we
are to take our legitimate place in the world as a developed nation by 2020.

Annual report (2006-07) published by ministry of steel.

Annual report (2006-07) published by TATA Steel.


REPORT posted by SAIL on its website.

Background Note prepared after ECONOMIC EDITORS CONFERENCE held

on 07 Nov. 2006.

Article published in magazine FRONTLINE in December 2006 edition. (Official website of ministry of industry). (Official website of TATA Steel). (Official website of Steel Authority of India). (official website of International Iron & Steel Institute). (Website of joint planning committee).