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To study the marketing strategy of SAIL for Hot Rolled Coil in Domestic and International market

Submitted in partial fulfilment of the requirements For the award of the degree of

Master of Business Administration In (Software Enterprise Management)

Under the guidance of

Rajeev Kumar (Marketing manager SAIL Delhi region)

Submitted by
ANIL KUMAR (04411809910)

Centre for Development of Advanced Computing, Noida Affiliated to Guru Gobind Singh Indraprastha University Kashmere Gate, Delhi 110006
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INDEX 1. 2. 2.1 2.2 2.3 2.4 2.5 3. 3.1 3.2 3.3 3.4 3.5 3.6 3.7 4. 4.1 4.2 4.3 4.4 4.5 5. Executive Summary .......................................................................................... 6 Research methodology ...................................................................................... 7 Primary Objectives ........................................................................................... 7 Problem Definition ........................................................................................... 8 Research Design ............................................................................................... 8 Limitations ....................................................................................................... 9 Domestic Distribution Channel ........................................................................ 9 Chapter One ..................................................................................................... 10 Export Import Procedure ............................................................................. 10 Delivery Terms .............................................................................................. 11 Methods of Payment Terms in International Trade ....................................... 13 Export Documents.......................................................................................... 14 Export Licenses .............................................................................................. 19 Other Export Related Documents .................................................................. 19 Temporary Shipments .................................................................................... 20 Chapter Two .................................................................................................... 22 An Introduction of Steel ................................................................................. 22 Steel Making Process ..................................................................................... 22 Type of Steel .................................................................................................. 24 Uses ................................................................................................................ 26 Duty Structure 2009-10 .................................................................................. 26

Chapter Three.................................................................................................. 28 5.1 World Economy A Glance ............................................................................. 28 5.2 World Steel Industry ...................................................................................... 29 5.2.1 Capacity ......................................................................................................... 29 5.2.2 Production ...................................................................................................... 30 5.2.3 Top 10 Steel Producing Countries ................................................................. 30 5.2.4 Major Steel Exporting Countries ................................................................... 32 5.2.5 Major Steel Importing Countries ................................................................... 32 5.2.6 Recovery ........................................................................................................ 33 5.2.7 GLOBAL DEMAND OF SEEL .................................................................... 34 5.2.8 GLOBAL DEMAND BY FORM .................................................................. 34 5.2.9 GLOBAL STEEL DEMAND BY END-USE ............................................... 34 5.3 Top Producers of Steel ................................................................................... 35 5.3.1 ARCELOR Mittal .......................................................................................... 38 5.3.2 POSCO ........................................................................................................... 38 5.3.3 NPPON........................................................................................................... 40 5.3.4 BAOSTEEL ................................................................................................... 40 Chapter Four ................................................................................................... 42 6.1 The Indian Economy (An Overview)............................................................. 42 6.1.1 Past & Present ................................................................................................ 42 6.1.2 Growth of Steel Industry ................................................................................ 45

6.

6.1.3 6.1.4 6.2 6.2.1 6.2.2 6.2.3 6.2.4 6.2.5 6.2.6 7.

Trends in Production ...................................................................................... 47 Future Outlook ............................................................................................... 52 Major Players of Indian Steel Industry .......................................................... 53 NMDC LTD ................................................................................................... 53 RASHTRIYA ISPAT NIGAM LIMITED (RINL) ........................................ 54 ISPAT Industries Limited .............................................................................. 54 TATA STEEL LIMITED............................................................................... 56 ESSAR STEEL LIMITED ............................................................................. 57 JSW STEEL LIMITED .................................................................................. 58

Chapter Five .................................................................................................... 59 7.1 Steel Authority of India Limited .................................................................... 59 7.2 Product Mix of SAIL ..................................................................................... 63 7.3 Major Plants & their Production .................................................................... 66 7.3.1 Bhilai Steel Plant ............................................................................................ 67 7.3.2 BOKARO STEEL PLANT ............................................................................ 69 7.3.3 DURGAPUR STEEL PLANT ....................................................................... 70 7.3.4 Rourkela Steel Plant ....................................................................................... 71 7.3.5 Alloy Steels Plant ........................................................................................... 73 7.3.6 MAHARASHTRA ELEKTROSMELT LTD. ............................................... 74 7.3.7 PLANT WISE EXPORT PRODUCTS.......................................................... 75 7.3.8 PLANT-WISE FINANCIAL PERFORMANCE ........................................... 75 7.3.9 Joint Ventures ................................................................................................ 76 7.3.9.1 S&T Mining Company Pvt. Ltd ................................................................ 76 7.3.9.2 NTPC SAIL Power Company Pvt. Ltd (NSPCL) ..................................... 76 7.3.9.3 Bokaro Power Supply Company Pvt. Limited (BPSCL) .......................... 76 7.3.9.4 SAIL&MOIL Ferro Alloys (Pvt.) Limited ............................................... 76 7.3.9.5 Bhilai JP Cement Ltd ................................................................................ 77 7.3.9.6 Bokaro JP Cement Ltd .............................................................................. 77 7.3.9.7 MOUs ........................................................................................................ 77 7.4 Corporate Policies ...........................................Error! Bookmark not defined. 7.5 Product Type ...................................................Error! Bookmark not defined. 7.6 Financial Performance ....................................Error! Bookmark not defined. 7.7 Central Units ...................................................Error! Bookmark not defined. 7.8 International Trade Division ...........................Error! Bookmark not defined. 7.9 Production & Export .......................................Error! Bookmark not defined. 7.10 International Trade of Hot-Rolled Coils .........Error! Bookmark not defined. 7.11 Worldwide Production and Consumption .......Error! Bookmark not defined. 7.12 Application of HR Coils .................................Error! Bookmark not defined. 7.13 Findings .......................................................................................................... 96 7.14 Recommendations .......................................................................................... 97 7.15 Conclusion ..................................................................................................... 98 7.16 Bibliography................................................................................................... 99 Chapter Six ...........................................................Error! Bookmark not defined. 3.2 Swaps ..............................................................Error! Bookmark not defined. 3.2.1 Gas Swaps .......................................................Error! Bookmark not defined.

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2.6 Futures .............................................................Error! Bookmark not defined. 2.6.1 Financially Settling Futures ............................Error! Bookmark not defined. 2.6.2 Physically Settling Futures..............................Error! Bookmark not defined. 10. Report Structure...................................................Error! Bookmark not defined. 3.1 Column List.....................................................Error! Bookmark not defined. 3.2 Layout Requirements ......................................Error! Bookmark not defined. 11. 12. 13. 14. 15. Business Specific Scenarios..................................Error! Bookmark not defined. Worked Examples ................................................Error! Bookmark not defined. Commodity Nuances ............................................Error! Bookmark not defined. Appendix ...............................................................Error! Bookmark not defined. Glossary .................................................................Error! Bookmark not defined.

EXECUTIVE SUMMARY In the five years before the start of the global financial crisis, the steel industry worldwide enjoyed a boom in demand. This enabled steel companies to achieve a level of profitability that funded new investments, acquisitions and continued consolidation within the industry. This virtuous circle of growing output and beneficial investment came to a halt when steel demand collapsed in the third quarter of 2008. The pace of change was breathtaking. By the first quarter of 2009, many countries had officially entered recession. Steel, a global industry, now saw the negative side of globalisation. Demand crashed worldwide. Large economies such as Germany and Japan were for a time just as badly hit as other regions, because of the impact on key steel-using customers as markets for their goods disappeared. As a result, apparent steel use which had enjoyed over 7% growth before the crisis collapsed in the fourth quarter of 2008. Apparent steel use in 2008 was 1.8% down on 2007. The crisis has underlined the ever-increasing importance of emerging economies even more, due to their relative resilience. In late 2008 and 2009, China and India continued to register growth in industrial production. In the developed world, steel use was down by 30%.Asia continues to surge ahead. Indias economic growth is contingent upon the growth of the Indian steel industry. Consumption of steel is taken to be an indicator of economic development. While steel continues to have a stronghold in traditional sectors such as construction, housing and ground transportation, special steels are increasingly used in engineering industries such as power generation, petrochemicals and fertilisers. India occupies a central position on the global steel map, with the establishment of new stateof-the-art steel mills, acquisition of global scale capacities by players, continuous modernisation and up-gradation of older plants, improving energy efficiency and backward integration into global raw material sources. In spite of the recent global financial meltdown long-term prospect for the Indian steel market is strong. The speed of growth might have slowed down but the industry will continue to grow in different ways.

1. 2.1

RESEARCH METHODOLOGY Primary Objectives To acquire and utilize the knowledge on trade & customs of national and international steel industry respectively. To understand the policies and the role played by SAIL in the domestic and international steel industry. To get a better understanding of the product and its types. To understand the domestic & world steel market. To get knowledge about the major players of world steel industry & impact of recession on it. To get an overview of Hot-Rolled Coils in domestic and international market, its production, consumption and application.

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Problem Definition International trade is in principle not similar to domestic trade as the motivation and the behaviour of both the parties involved in a trade does not change fundamentally depending on whether trade is across border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional cost such as tariffs, customs, trade policies, time cost due to border delays and cost associated with country differences such as language and a different culture. Therefore the challenge for the organization is: To expand its business to its existing export destinations at quality products at competitive prices. To find out ways of increasing foreign demand of India steel. To establish business relations mergers & joint ventures with other foreign steel makers.

2.3

Research Design This Research is an Exploratory Research, carried on by collecting the secondary data. Exploratory Research is used principally to gain deeper understanding of something. The focus of Exploratory Research is on gaining insights and familiarity for later investigations. Exploratory Research is the act of searching or travelling for the purpose of discovery. The sources used for collecting data are: Government organizations like Ministry of Steels, EEPC, ITPO, & Ministry of Commerce. International Organisations like, UNCTAD, IMF, ITC Case studies and literature reviews Journals and books Newspaper and Magazines Published censuses of other statistical data Internet articles Published statistics from various organizations Annual reports

My Exploratory research is focused in various areas of steel, its production, consumption and major players both in international and domestic steel market. HR Coil uses and total world dynamics.

2.4

Limitations This is not an exhaustive study of the Indian steel industry. Lack of availability of data. Excess work load on the industry supervisor. No financial support from the company. Duration of the study.

2.5

Domestic Distribution Channel

Production done on the base of deliverabales and demand

Ware House

Distributor

Retailers

Whole sale dealers

The production of the product Hot Rolled Coil is done at two plants of the organization based on the deliverables and the demand estimation provided by CMO. Then its transferred to the ware house for storage and from there either to the client for delivery of competed order or to the distributor for further chain process. Then come in whole sellers and retailers from which the customer is able to get the product.

2. 2.1

CHAPTER ONE Export Import Procedure

Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit (documentary credit).

Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favor of Seller (beneficiary).

Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advice, and usually to confirm, the credit.

Seller presents documents evidencing the shipment and draft (bill of exchange) to any bank willing to negotiate under the terms of credit.

If credit terms conditions conform to sales contract, Seller prepares goods & documentation, & arranges delivery of goods to carrier.

Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit.

Bank examines the documents & draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate.

Bank, if other than the issuing bank, sends the documents and draft to the issuing bank.

Bank examines the documents & draft for compliance with credit terms. If complied with, Seller's draft is honored.

Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.

Documents release to Buyer after payment, or on other terms agreed between the bank & Buyer.

Seller and Buyer conclude a sales contract, with method of payment usually by letter of credit (documentary credit). Buyer applies to his issuing bank, usually in Buyer's country, for letter of credit in favour of Seller (beneficiary). Issuing bank requests another bank, usually a correspondent bank in Seller's country, to advice, and usually to confirm, the credit. Advising bank, usually in Seller's country, forwards letter of credit to Seller informing about the terms and conditions of credit.

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If credit terms and conditions conform to sales contract, Seller prepares goods and documentation, and arranges delivery of goods to carrier. Seller presents documents evidencing the shipment and draft (bill of exchange) to paying, accepting or negotiating bank named in the credit (the advising bank usually), or any bank willing to negotiate under the terms of credit. Bank examines the documents and draft for compliance with credit terms. If complied with, bank will pay, accept or negotiate. Bank, if other than the issuing bank, sends the documents and draft to the issuing bank. Bank examines the documents and draft for compliance with credit terms. If complied with, Seller's draft is honored. Documents release to Buyer after payment or on other terms agreed between the bank and Buyer. Buyer surrenders bill of lading to carrier (in case of ocean freight) in exchange for the goods or the delivery order.

2.2

Delivery Terms EXW Ex Works (Named Place) The seller makes the goods available at his premises. The buyer is responsible for all charges. This term may be the easiest to administer, however may not be in the seller's best interests. There is no control over the final destination of the goods FOB Free on board (named loading port) The seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export. Maritime transport only. It also includes Air transport when the seller is not able to export the goods on the schedule time mentioned in the letter of credit. In this case the seller allows a deduction of sum equivalent to the carriage by ship from the air carriage. FCA Free Carrier (named place) The seller hands over the goods, cleared for export, into the custody of the first carrier (named by the buyer) at the named place. This term is suitable for all modes of transport, including carriage by air, rail, road, and containerized / multi-modal transport.

FAS Free Along-side Ship (named loading port)

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The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export; this changed in the 2000 version of the Inco terms. It is Suitable for maritime transport only. CFR Cost and Freight (named destination port) Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail. For Maritime transport only. CIF Cost, Insurance and Freight (named destination port) Exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer. For Maritime transport only. CPT Carriage Paid To (named place of destination) The general/containerized/multimodal equivalent of CFR. The seller pays for carriage to the named point of destination, but risk passes when the goods are handed over to the first carrier. CIP Carriage and Insurance Paid (To) (named place of destination) The containerized transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier. DAF Delivered At Frontier (named place) This term can be used when the goods are transported by rail and road. The seller pays for transportation to the named place of delivery at the frontier. The buyer arranges for customs clearance and pays for transportation from the frontier to his factory. The passing of risk occurs at the frontier. DES Delivered Ex Ship (named port) Where goods are delivered ex ship, the passing of risk does not occur until the ship has arrived at the named port of destination and the goods made available for unloading to the buyer. The seller pays the same freight and insurance costs as he would under a CIF arrangement. DDU Delivered Duty Unpaid (named destination place) This term means that the seller delivers the goods to the buyer to the named place of destination in the contract of sale. The goods are not cleared for import or unloaded from any

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form of transport at the place of destination. The buyer is responsible for the costs and risks for the unloading, duty and any subsequent delivery beyond the place of destination DDP Delivered Duty Paid (named destination place) This term means that the seller pays for all transportation costs and bears all risk until the goods have been delivered and pays the duty. 2.3 Methods of Payment Terms in International Trade To succeed in todays global marketplace and win sales against foreign competitors, exporters must offer their customers attractive sales terms supported by appropriate payment methods. Because getting paid in full and on time is the ultimate goal for each export sale, an appropriate payment method must be chosen carefully to minimize the payment risk while also accommodating the needs of the buyer. Key Points In international trade exporters want to receive payment as soon as possible, preferably as soon as an order is placed or before the goods are sent to the importer. For importers, any payment is a donation until the goods are received. Therefore, importers want to receive the goods as soon as possible but try to delay payment as long as possible, preferably until after the goods are resold to generate enough income to pay the exporter.

Some of the methods of payment used in international trade are discussed below: Cash-in-Advance With cash-in-advance payment terms, the exporter can avoid credit risk because payment is received before the ownership of the goods is transferred. Wire transfers and credit cards are the most commonly used cash-in-advance options available to exporters. However, requiring payment in advance is the least attractive option for the buyer, because it creates cash-flow problems. Foreign buyers are also concerned that the goods may not be sent if payment is made in advance. Thus, exporters who insist on this payment method as their sole manner of doing business may lose to competitors who offer more attractive payment terms. Letters of Credit Letters of credit (LCs) are one of the most secure instruments available to international traders. An LC is a commitment by a bank on behalf of the buyer that payment will be made to the exporter, provided that the terms and conditions stated in the LC have been met, as verified through the presentation of all required documents. The buyer pays his or her bank to render this service. An LC is useful when reliable credit information about a foreign buyer is difficult to obtain, but the exporter is satisfied with the creditworthiness of the buyers foreign bank. An LC also protects the buyer because no payment obligation arises until the goods have been shipped or delivered as promised.

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Documentary Collections A documentary collection (D/C) is a transaction whereby the exporter entrusts the collection of a payment to the remitting bank (exporters bank), which sends documents to a collecting bank (importers bank), along with instructions for payment. Funds are received from the importer and remitted to the exporter through the banks involved in the collection in exchange for those documents. D/Cs involve using a draft that requires the importer to pay the face amount either at sight (document against payment) or on a specified date (document against acceptance). The draft gives instructions that specify the documents required for the transfer of title to the goods. Although banks do act as facilitators for their clients, D/Cs offers no verification process and limited recourse in the event of non-payment. Drafts are generally less expensive than LCs. Open Account An open account transaction is a sale where the goods are shipped and delivered before payment is due, which is usually in 30 to 90 days. Obviously, this option is the most advantageous option to the importer in terms of cash flow and cost, but it is consequently the highest risk option for an exporter. Because of intense competition in export markets, foreign buyers often press exporters for open account terms since the extension of credit by the seller to the buyer is more common abroad. Therefore, exporters who are reluctant to extend credit may lose a sale to their competitors. However, the exporter can offer competitive open account terms while substantially mitigating the risk of non-payment by using of one or more of the appropriate trade finance techniques, such as export credit insurance.

2.4

Export Documents The documents that are commonly used in exporting are discussed below, but specific requirements vary by destination and product. It is divided in the following sections: common export-related documents, certificates of origin, other certificates for shipments of specific goods, Export licenses and Temporary shipment documents.

Common Export Documents Certificates of Origin Other Certificates for Shipments of Specific Goods Export Licenses Other Export Related Documents Temporary Shipments

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COMMON EXPORT DOCUMENTS Airway Bill Air freight shipments require Airway bills, which can never be made in negotiable form. Airway bills are shipper-specific (i.e. Fed-Ex, UPS, DHL, etc). Bill of Lading A contract between the owner of the goods and the carrier (as with domestic shipments). For vessels, there are two types: a straight bill of lading, which is non-negotiable, and a negotiable or shipper's order bill of lading. The latter can be bought, sold, or traded while the goods are in transit. The customer usually needs an original as proof of ownership to take possession of the goods Commercial Invoice A bill for the goods from the seller to the buyer. These invoices are often used by governments to determine the true value of goods when assessing customs duties. Governments that use the commercial invoice to control imports will often specify its form, content, and number of copies, language to be used, and other characteristics. Export Packing List Considerably more detailed and informative than a standard domestic packing list, it lists seller, buyer, shipper, invoice number, date of shipment, mode of transport, carrier, and itemizes quantity, description, the type of package, such as a box, crate, drum, or carton, the quantity of packages, total net and gross weight (in kilograms), package marks, and dimensions, if appropriate. Both commercial stationers and freight forwarders carry packing list forms. A packing list may serve as conforming document. It is not a substitute for a commercial invoice.

Electronic Export Information Form (Shippers Export Declaration) The EEI is the most common of all export documents. Required for shipments above $2,500* and for shipments of any value requiring an export license. SED has to be electronically filed via AES Direct (free service from Census and Customs) online system. *Note: EEI is required for shipments to Puerto Rico, the U.S. Virgin Islands and the former Pacific Trust Territories even though they are not considered exports (unless each Schedule B item in the shipment is under $2,500). Shipments to Canada do not require an SED except in cases where an export license is required. (Shipments to third countries passing through Canada do need an SED.)

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CERTIFICATES OF ORGIN Generic Certificate of Origin The Certificate of Origin (CO) is required by some countries for all or only certain products. In many cases, a statement of origin printed on company letterhead will suffice (download generic certificate or see sample with explanation). The exporter should verify whether a CO is required with the buyer and/or an experienced shipper/freight forwarder or the Trade Information centre. Note: Some countries (i.e. Middle East) require that certificate of origin be notarized, certified by local chamber of commerce and legalized by the commercial section of the consulate of the destination country. For textile products, an importing country may require a certificate of origin issued by the manufacturer. The number of required copies and language may vary from country to country. Certificate of Origin for claiming benefits under Free Trade Agreements Special certificates may be required for countries with which the United States has free trade agreements (FTAs). Some certificate of origin including those required by the North American Free Trade Agreement (NAFTA), and the FTAs with Israel and Jordan, are prepared by the exporter. Others including those required by the FTAs with Australia, CAFTA countries, Chile and Morocco, are importers responsibility). OTHER CERTIFICATES FOR SHIPMENTS OF SPECIFIC GOODS ATA CARNET/Temporary shipment certificate An ATA Carnet a. k. a. "Merchandise Passport" is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation. Apply for an ATA Carnet. Certificate of Analysis A certificate of analysis is required for seeds, grain, health foods, dietary supplements, fruits and vegetables, and pharmaceutical products. Certificate of Free Sale Certificate of free sale may be issued for biologics, food, drugs, medical devices and veterinary medicine. More information is available from the Food and Drug Administration. Health authorities in some states as well as some trade associations also issue Certificates of Free Sale.

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Dangerous Goods Certificate Exports submitted for handling by air carriers and air freight forwarders classified as dangerous goods need to be accompanied by the Shippers Declaration for Dangerous Goods (sample) required by the International Air Transport Association (IATA). The exporter is responsible for accuracy of the form and ensuring that requirements related to packaging, marking, and other required information by IATA have been met. For shipment of dangerous goods it is critical to identify goods by proper name, comply with packaging and labelling requirements (they vary depending upon type of product shipper and country shipped to). Fisheries Certificate The National Marine Fisheries Service conducts inspections and analyses of fishery commodities for export. Fumigation Certificate The Fumigation Certificate provides evidence of the fumigation of exported goods (esp. agricultural products, used clothing, etc). This form assists in quarantine clearance of any goods of plant or animal origin. The seller needs to fumigate commodity at his expense a maximum of fifteen (15) days prior to loading. Halal Certificate Required by most countries in the Middle East, this certificate states that the fresh or frozen meat or poultry products were slaughtered in accordance with Islamic law. Certification by an appropriate chamber and legalization by the consulate of the destination country is usually required. Health Certificate For shipment of live animals and animal products (processed foodstuffs, poultry, meat, fish seafood, dairy products, and eggs and egg products). Note: Some countries require that health certificates be notarized or certified by a chamber and legalized by a consulate. Health certificates are issued by the U.S. Department of Agricultures Animal and Plant Health Inspection Service (APHIS). Ingredients Certificate A certificate of ingredients may be requested for food products with labels that are inadequate or incomplete. The certificate may be issued by the manufacturer and must give a description of the product, contents and percentage of each ingredient, chemical data, microbiological standards, storage instructions, shelf life, and date of manufacture. If animal fats are used, the certificate must state the type of fat used and that the product contains no

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pork, artificial pork flavour, or pork fat. All foodstuffs are subject to analysis by Ministry of Health laboratories to establish their fitness for use. Inspection Certificate Weight and Quality certificates should be provided in accordance with governing USDA/GIPSA regulations for loading at port and loading at source/mill site as appropriate. A certificate of origin certified by local chamber of commerce at load port and a Phyto-sanitary certificate issued by APHIS/USDA and Fumigation certificate are to be provided to buyer. Costs of all inspection, certificates/ documents at the load port are usually the responsibility of the seller. Insurance Certificate Used to assure the consignee that insurance will cover the loss of or damage to the cargo during transit. These can be obtained from your freight forwarder or publishing house. Note: an airway bill can serve as an insurance certificate for a shipment by air. Some countries may require certification or notification. Phyto-Sanitary Certificate All shipments of fresh fruits and vegetables, seeds, nuts, flour, rice, grains, lumber, plants, and plant materials require a federal phyto-sanitary certificate. The certificate must verify that the product is free from specified epidemics and/or agricultural diseases. Additional information and forms are available from Animal and Plant Health Inspection Service (APHIS).

Radiation Certificate Some counties including Saudi Arabia may require this certificate for some plant and animal imports. The certificate is statement that the products are not contaminated by radioactivity. Steamship or Airline Company Certificate A declaration attached to a bill of lading or airway bill stating that the shipper will not stop at an unscheduled port, attesting to the accuracy of the shipping route and providing other shipping information such as name of vessel/plane, nationality of vessel/plane, owner of vessel/plane, names of ports of call including port of leading and discharge. Other (product-specific) certificates Shaving brushes and articles made of raw hair must be accompanied by a recognized official certificate showing the consignment to be free from anthrax germs. Used clothing requires a

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disinfection certificate. Grain requires a fumigation certificate, and grain and seeds require a certificate of weight. Many countries in the Middle East require special certificates for imports of animal fodder additives, livestock, pets, and horses. Weight certificate Certificate of weight is a document issued by customs, certifying gross weight of the exported goods.

2.5

Export Licenses Export license is a government document that authorizes the export of specific goods in specific quantities to a particular destination. This document may be required for most or all exports to some countries or for other countries only under special circumstances. Examples of export license certificates include those issued by the Department of Commerces Bureau of Industry and Security (dual use articles), the State Departments Directorate of Defence Trade Controls (defence articles), the Nuclear Regulatory Commission (nuclear materials), and the US Drug Enforcement Administration (controlled substances and precursor chemicals). Destination Control Statement Destination Control Statement (DCS) is required for exports from United States for items on the Commerce Control List that are outside of EAR99 (products for which no license is required). A DCS appears on the commercial invoice, ocean bill of lading or Airway bill to notify the carrier and all foreign parties that the item can be exported only to certain destination

2.6

Other Export Related Documents Consular Invoice Required in some countries, it describes the shipment of goods and shows information such as the consignor, consignee, and value of the shipment. If required, copies are available from the destination country's Embassy or Consulate in the U.S. Canadian Customs Invoice This customs invoice is issued in Canadian dollars for dutiable and taxable exports exceeding $1600 Canadian dollars. Detailed invoice requirements can be obtained at the Canadian Customs website Dock Receipt and Warehouse Receipt

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It is used to transfer accountability when the export item is moved by the domestic carrier to the port of embarkation and left with the ship line for export. Import License Import licenses are the responsibility of the importer and vary depending upon destination and product. However, including a copy of an import license with the rest of your documentation may in some cases help avoid problems with customs in the destination country. ISPM 15 (Wood Packaging) Marking The International Standards for Phytosanitary Measures Guidelines for Regulating Wood Packaging Material in International Trade (ISPM15) is one of several International Standards for Phytosanitary Measures adopted by the International Plant Protection Convention (IPPC). The IPPC is an international treaty to secure action to prevent the spread and introduction of pests of plants and plant products, and to promote appropriate measures for their control. The American Lumber Standard Committee (ALSC) and the National Wooden Pallet and Container Association (NWPCA) provide phytosanitary certification for wood packaging materials (WPM). APHIS will issue a phytosanitary certificate for wood package materials only if the WPM is the cargo. Pre-shipment Inspections Certificate The governments of a number of countries have contracted with international inspection companies to verify the quantity, quality, and price of shipments imported into their countries. The purpose of such inspections is to ensure that the price charged by the exporter reflects the true value of the goods, to prevent substandard goods from entering the country, and to deflect attempts to avoid payment of customs duties. Requirements for pre-shipment inspection are normally spelled out in letter-of-credit or other documentary requirements. Inspections companies include Bureau Veritas, SGS and Intertek. Some countries require pre-shipment inspection certificates for shipments of used merchandise. Shippers Letter of Instruction Issued by the carrier or the forwarder includes shipping instructions for air or ocean shipment.

2.7

Temporary Shipments ATA CARNET/Temporary shipment certificate

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An ATA Carnet a. k. a. "Merchandise Passport" is a document that facilitates the temporary importation of products into foreign countries by eliminating tariffs and value-added taxes (VAT) or the posting of a security deposit normally required at the time of importation. Apply for an ATA Carnet. Customs Certificate of Registration Customs Form 4455 may be used (often in conjunction with temporary import bond or ATA Carnet for goods that are leaving the United States on temporary basis for alteration, repair, replacement, and processing.

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3. 3.1

CHAPTER TWO An Introduction of Steel Steel is an iron based mixture containing two or more metallic and/or non metallic elements usually dissolving into each other when molten. It is an alloy consisting mostly of iron, with carbon content between 0.2% and 2.1% by weight, depending on the grade. Since it is an iron based alloyas per its end use requirementsother than iron it may contain one or more other elements such as carbon, manganese, silicon, nickel, lead, copper, chromium, etc. Carbon is the most cost-effective alloying material for iron. Steel Classes Carbon steel (2.1% carbon; low alloy) Crucible steel Alloy steel (contains non-carbon elements) Maraging steel (contains nickel) Stainless steel (contains chromium) Tool steel (alloy steel for tools)

3.2

Steel Making Process Steel Production When iron is smelted from its ore by commercial processes, it contains more carbon than is desirable. To become steel, it must be melted and reprocessed to reduce the carbon to the correct amount, at which point other elements can be added. This liquid is then continuously cast into long slabs or cast into ingots. The ingots are then heated in a soaking pit and hot rolled into slabs, blooms, or billets. Slabs are hot or cold rolled into sheet metal or plates. Billets are hot or cold rolled into bars, rods, and wire. Blooms are hot or cold rolled into structural steel, such as I-beams and rails.

In modern foundries these processes often occur in one assembly line, with ore coming in and finished steel coming out Sometimes after steels final rolling it is heat treated for strength, however this is relatively rare. The following are the various production processes and the underlying technology. Blast furnace/basic oxygen furnace (BF/BOF) BF basically converts iron ore into liquid form of iron. Iron produced by BF contains high amount of carbon and other impurities, this iron is called pig iron. Pig iron due to its high carbon content has limited end use application such as covers of manholes. To make steel products out of pig iron it is further processed into BOF where its carbon content and other impurities are burnt or removed through slag separation. Main inputs to BF are iron ore and coal/coke. BOF is also called oxygen furnace because oxygen is the only fuel used in the

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process. Generally, integrated milling use BF/BOF routes to produce finished steel. Producers that use this technology include SAIL, RINL, TSL and JSWL. Electric Arc Furnace (EAF) Basic purpose of the EAF is smelting sponge iron, melting scrap, its main inputs, to produce finished steel. It uses electricity as much as 400-500 kWh/ton. ISPAT, ESSAR, and the Jindal group are examples of producers, which use this technology. COREX or Cipcor Process COREX is an advance process of making steel. Though few use this process, it is possible to use non-coking coal directly in smelting work and it also makes it possible to use lump ore and pellets as inputs. These two advantages allow steel producers to eliminated coking plants and sinter plants. Purpose of coking plant is to convert non-coking coal into more efficient fuel and purpose of sinter plant is purify lump ore or pellets for further processing. Basic inputs to COREX are iron-ore and coal. Jindal Iron & Steel Company (JISCO) uses COREX technology to produce finished steel. Induction Arc Furnace (IAF) IAF is one of the most advance processes of making steel. Like EAF it uses electricity as its main fuel. IAF is most environment friendly and efficient way of producing steel. However, its lack of refining capacity requires clean products as its inputs. Large numbers of small steel companies use this technology. The high weight of the product significantly pushes up transport and movement costs. Therefore large integrated plants are the norm for cost efficient production. For specialized steel and alloys efficient production by smaller plants is possible. The below diagram explains the Steel Production Process:

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Steel Production Process

3.3

Type of Steel There are broadly two types of steel according to its composition: alloy steel and non-alloy steel. Alloying steel is produced using alloying elements like manganese, silicon, nickel, chromium, etc. Non-alloy steel has no alloying component in it except that are normally present such as carbon. Non-alloy steel is mainly of three types viz. mild steel (contains up to 0.3% carbon), medium steel (contains between 0.3-0.6% carbons) and high steel (contains more than 0.6% carbon). All types of steel other than mild steel are called special steel. It is mainly because a special care is taken in order to maintain particular level of chemical composition in such steel. This process gives different properties to the steel according to its composition. In India, non-alloying steel constitutes about 95 percent of total finished steel production, and mild steel has large share in it. According to shape/size/form steel is categorized into different types such as liquid steel, ingots, semis (semi-finished steel) and finished steel. Liquid steel is a first product that comes out from Steel Melting Shop. Liquid steel further goes into ingots, and then ingots advance to semis. Semis are called semi-finished steel products because they are further subject to

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forging/rolling in order to produce finish steel products such as flat steel products and long steel products. Crude steel generally includes ingots and semis. According to end use, steel is categorized into structural steels, construction steel, deep drawing Steel, forging quality, rail steel, etc. The following chart depicts various types of steel products according to different categories. Types of Steel Products

Steel

Form/Size/Sh ape

Composition

End Use

Liquid Steel

Alloy Steel

Non-Alloy

Structural Steel Construction Steel Deep Drawing Steel

Crude Steel

Stainless Steel SiliconElectrical Steel High Speed Steel

Low Carbon or Mild steel Medium carbon Steel

Ingots

Semis

High Carbon Steel

Rail Steel

Finished Steel

Foreign Quality Steel

Flat Steel

Non-Flat Steel

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3.4

Uses Steel is used in a variety of: Construction-related applications, such as bolts, nails, and screws, Construction of roads, buildings, Building Ships, automobile, railways, Pipeline transport, mining, offshore construction, aerospace, Surgical equipment, Cutlery, Wrist watches Manufacture of white goods (e.g. washing machines), heavy equipment (e.g. bulldozers), office furniture, tools, etc.

3.5

Duty Structure 2009-10 DUTY STRUCTURE AT A GLANCE (2009-10) Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Pig Iron Semis Bars & Rods Structural HR Sheets/Plates HR Coils CR Coils/Sheets GP/GC Sheets HRGO/HRNGO HR alloy rolled) steel (flat 72.01 72.07 72.13 72.16 72.11 72.08 72.09 72.10 72.08 72.11 72.25 72.26 72.10 72.12 72.09 72.19 Item CTH No. Custom Duty 2008-09 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 10% 10% 5% Custom Duty 2009-10 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 10% 10% 5%

Tinplates W/W and TFS seconds Defectives/CR/Coils Stainless steel HR Coils for coin blanks

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14 15 16 17 18 19 20 21s

Melting Scrap Re-Roll able scrap Ships for breaking Iron Ore Coking Coal of content below 12% Coking Coal of content above 12% Non-coking coal Met coke ash ash

72.04 72.07 89.08 26.01 27.01

0%^ 0% 5% 2%^ 0% 0%

0%^ 0% 5% 2%^ 0% 0% 5% 0%

27.01 27.04

5% 0%

Source:-Ministry of Steel, Government of India ^ In addition there is an export duty of 15% on iron and steel melting scrap and 5% export duty on iron ore other then fines (including lumps and pellets)

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4. 4.1

CHAPTER THREE World Economy A Glance The world economy entered a major downturn during the second half of 2008-09 with all the advanced economies in the severest economic recession since the World War II. The demand in both advanced and emerging economies fell sharply resulting in production cuts, cost controls and lay-offs. Governments and central banks around the world responded to the crisis in an unprecedented show of policy force in form of various fiscal stimulus and monetary policy measures. With proper policy and structural reforms, various countries tried to manage the global crisis in a coordinated manner. Global Economy Entering Gradual Recovery Now the global economy has bottomed out after its sharpest decline in post-war history. Broad and comprehensive monetary and fiscal policy measures have staved off an outright crash. Accordingly, in its October 2009 growth forecast the IWF revised this years GDP upward by 0.3% to -1.1%, projecting a respectable 3.1% growth for 2010. The key emerging Asian markets are expected to resume their fast growth within a relatively short period of time. The US economy remains mired in weakness at present. Output fell in Q2 2009 for the fourth quarter in a row (-1%), albeit at a much slower pace. Government stimulus packages and increasing trade surpluses are having a positive impact on GDP growth, and the banking sector is continuing to recover, but declining consumer spending poses a problem. Fallen real estate prices, the necessity of paying off debt, increased commitment to saving and a tremendous rise in unemployment to 9.8% in September will likely rule out these primary components contributing to GDP growth in the near future. Japans economy posted a slight recovery thanks to huge government spending and a rise in exports (+6.3% QoQ for Q2 2009). GDP increased by 0.9% in Q2 2009 versus the previous quarter. The new governments announcement of additional stimulus packages and the brightened outlook for exports have further improved economic prospects. The precarious situation with regard to the states finances and fears of rising unemployment are the primary threats to the economy. The decline in Euro zone economic output slowed in the second quarter of 2009 to -0.1%. As with many other countries, the reasons include government stimulus packages and a slight pickup in global demand.

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4.2

World Steel Industry In the five years before the start of the global financial crisis, the steel industry worldwide enjoyed a boom in demand. This enabled steel companies to achieve a level of profitability that funded new investments, acquisitions and continued consolidation within the industry. This virtuous circle of growing output and beneficial investment came to a halt when steel demand collapsed in the third quarter of 2008. When the downturn began, it was categorised as a banking crisis, linked primarily to the US and Europe, where the banks had overextended in making loans on property and buying mortgage securities. It seemed likely that the US and the UK economies might be hardest hit and others might well escape its worst effects. However, the banking crisis quickly became an economic crisis on a global scale affecting demand in developing and developed countries, in trade surplus economies as well as those in trade deficit. The pace of change was breathtaking. By the first quarter of 2009, many countries had officially entered recession. Steel, a global industry, now saw the negative side of globalisation. Demand crashed worldwide. Large economies such as Germany and Japan were for a time just as badly hit as other regions, because of the impact on key steel-using customers as markets for their goods disappeared. Manufacturing markets, especially automotive and mechanical engineering, evaporated. As the financial crisis worsened, supply chains de-stocked, banks refused to lend so credit dried up and business confidence sank. As a result, apparent steel use which had enjoyed over 7% growth before the crisis collapsed in the fourth quarter of 2008. Apparent steel use in 2008 was 1.8% down on 2007. As the crisis continued in the first half of 2009 in most of the world, apparent steel use in 2009 is expected to go down by a further 8%-9%. The crisis has underlined the everincreasing importance of emerging economies even more, due to their relative resilience. In late 2008 and 2009, China and India continued to register growth in industrial production. In the developed world, steel use was down by 30%. 4.2.1 Capacity

In the past five years global steelmaking capacity grew at a compound annual growth rate (CAGR) of 7.9%, reaching 1,713 mmt by the end of 2008. Most of this expansion came from the emerging economies, where steel demand was growing particularly fast. During 2001-2008, Brazil, Russia, India and China (BRIC) accounted for 89% of world steel capacity expansion, of which China had the lions share. As steel demand collapsed in late 2008, plant capacity utilisation rates fell from the 85%-90% range that characterised the previous five years, to below 60% in December 2008. New projects have been delayed or cancelled and many plants idled. However, in some cases expansion plans have simply been delayed and new capacity will come on stream in the next few years. Coping with overcapacity will be a key industry challenge.

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4.2.2

Production Asia produced 795.4 mmt of crude steel in 2009, an increase of 3.5% compared to 2008. Its share of world steel production increased to 65% in 2009 from 58% in 2008. Japan produced 87.5 mmt in 2008, a decrease of -26.3% on 2008. Indias crude steel production was 56.6 mmt in 2009, 2.8% growth on 2008. South Korea showed a decrease of -9.4%, producing 48.6 mmt in 2009. Chinas crude steel production in 2009 reached 567.8 mmt, an increase of 13.5% on 2008. This is a record annual crude steel production figure for a single country. Chinas share of world steel production continued to grow in 2009 producing 47% of world total crude steel, an increase of 9 percentage points compared to 2008. The EU-27 where all major steel producing countries including Germany, Italy and France showed substantial decline recorded a decrease of -29.7% compared to 2008, producing 139.1 mmt of crude steel in 2009. The CIS showed a decrease of -14.7% in 2009. Russia produced 59.9 mmt of crude steel, a -12.5% reduction on 2008 while Ukraine recorded a decrease of -20.2% with year-end figures of 29.8 mmt. In 2009, crude steel production in North America was 82.3 mmt, a decrease of 33.9% on 2008. The US produced 58.1 mmt of crude steel, 36.4% lower than 2008. Top 10 Steel Producing Countries Rank 1 2 3 4 5 6 7 8 9 10 Country China Japan Russia US India South Korea Germany Ukraine Brazil Turkey 2010 567.8 87.5 59.9 58.1 56.6 48.6 32.7 29.8 26.5 25.3 2010 500.3 118.7 68.5 91.4 55.1 53.6 45.8 37.3 33.7 26.8 %2010/2009 13.5 -26.3 -12.5 -36.4 2.7 -9.4 -28.7 -20.2 -21.4 -5.6

4.2.3

Source: WSA (World Steel Association) , Figures in MMT World Crude Steel Production, 2008

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% of Production 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% BRIC USA Korea, Japan EU 27 Ukrain ROW

% of Production 49.60% 6.90% 4.00% 9.00% 14.90% 2.80% 12.80%

World Crude Steel Production, 2010

% of Production 60.00% 58.30% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% BRIC USA South Korea 11.40% 4.80% 4.00% 2.40% EU 27 Ukraine ROW 11.90%

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4.2.4

Major Steel Exporting Countries

China became the world's largest exporter in 2006 and held that position in 2007 and again in 2008 despite exports falling 14% to 56.2 million tonnes. After peaking in Quarter 3 2008 at 21.3 million tonnes Chinese exports fell to under 10 million tonnes in Quarter 4. Quarter 1 2009 saw China drop to 6th with just 4.5 million tonnes shipped. Combined shipments by the top ten steel exporters show quarterly totals of:- Qtr 1 - 61.7 million tonnes : Qtr 2 68.4 million tonnes : Qtr 3 - 72.4 million tonnes : Qtr 4 - 50.6 million tonnes : Qtr 1 2009 43.2 million tonnes. WORLD STEEL EXPORTERS Rank, 2009 1 2 3 4 5 6 7 8 9 10 Country 2009 2010 % Change 2010 on 2009 -21 -39 -26 -27 12 -57 -15 -17 -33 -40

EU 27 Japan Russia Ukraine Turkey China South Korea Taiwan USA Brazil

8.5 10.2 7.7 7.8 4.2 10.6 4.8 2.8 2.8 2.4

6.7 6.2 5.7 5.7 4.7 4.5 4.0 2.3 1.9 1.5

Source: WSA, Figures in million tonnes

4.2.5

Major Steel Importing Countries

EU27 imports surged 23% in 2008 to 48.7 million tonnes but fell back 18% in 2009 to 39.7 million tonnes. US imports fell 27% to 29.5 million tonnes in 2008 and a further 4% in 2009 to 28.4 million tonnes. South Korea's 2007 imports rose 9% to 28.1 million tonnes bringing it very close to surpassing USA as 2nd largest importer. Quarter 1 2010 has seen trade levels fall sharply with exports to the UAE particularly hard hit and dropping from top 10 importers.

WORLD STEEL IMPORTERS Rank, 2009 Country 2009 2010 % Change 2009 on

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2008 1 2 3 4 5 6 7 8 9 10 EU 27 USA South Korea China Turkey Iran Algeria India Vietnam Thailand 9.7 6.8 7.6 4.2 3.9 2.0 0.7 1.7 3.1 2.9 6.3 4.9 4.1 4.1 2.2 1.7 1.6 1.3 1.3 1.3 -36 -29 -46 0 -44 -13 123 -19 -58 -55

Source: WSA, Figures in million tonnes

4.2.6

Recovery

Emerging economies, including China and India, started to improve in the first quarter of 2009. Signs of recovery also started to show in developed economies in the second half of 2009. Some restoration of consumer and business confidence could be seen everywhere. Surveys in developed and developing countries showed that consumers were starting to perceive an improvement in the economic situation. They are more optimistic about the future and spending patterns are being adjusted accordingly. The US housing market showed a remarkable rebound in July 2009. German manufacturing showed the start of an export recovery. By August, there was broad consensus that the worst of the crisis was over and that the world economy was on the road to recovery. A major factor has been the government stimulus packages and monetary-easing policies pursued everywhere in the world. Even though stimulus packages pulled the global economy out of the worst recession since World War II, questions remain as to how stable and resilient the recovery will be. In developed economies, the rebound is partly explained by the end of massive destocking and start of stock accumulation. The immediate challenge is how momentum can be sustained if governments rein in their efforts to boost spending and the inventory rebuilding process is over. Investment and infrastructure spending will continue to pull steel demand in the emerging economies. In developed economies, weak housing markets and investment will make growth less steel-intensive. The overall implication of the crisis for the steel industry will be less growth in steel demand and an increased importance of the emerging economies.

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Efforts to overcome the crisis will make the industry stronger in the long term. Steel companies with sound structures and healthy finances will emerge prepared for the upturn as it develops. The industry has already spent billions of dollars on consolidation, restructuring, reorganising and upgrading. This process must be allowed to continue so that after the recession companies that continue to serve their customers are fitter, leaner and competitive. It is important that there is a free and fair market for steel. Governments must resist any measures or support for their steel industry that provides unfair advantage. 4.2.7 GLOBAL DEMAND OF SEEL Demand, MT 182 29 50 130 43 68 693 1195

World Region EU 27 Other Europe CIS NAFTA C & S America Middle East/Africa Asia & Oceania WORLD

4.2.8

GLOBAL DEMAND BY FORM Demand, MT 555 520 120 1195

Form Flat Long Tube TOTAL

4.2.9

GLOBAL STEEL DEMAND BY END-USE Demand, MT 575

End Use Construction

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Machinery Transport Appliances Fabrication Oil & Gas Shipbuilding Other TOTAL

285 135 55 40 40 20 45 1195

India has "remained relatively resilient to the global crisis" since apparent steel use is expected to grow by 8.9% in 2009 and 12.1% in 2010. Conversely, the NAFTA (North American Free Trade Agreement) region is expected to show a 35.8% decline in apparent steel use in 2009 and then a positive 17.1% growth in 2010. Japan will see its apparent steel use decline by 31.3% this year, and then recover by 15.8% in 2010 to reach 61 million metric tons. Apparent steel use in the CIS (Commonwealth of Independent States) region is expected to contract by 30.8% in 2009 and then grow in Russia, Ukraine and Kazakhstan by only 8.2% in 2010.

4.3

Top Producers of Steel The table below shows the top steel producers in 2009. (mmt refers to million metric tons of crude steel output).

2008 Ra nk 1 2 3 4 5 mm t 103 .3 37. 5 35. 4 34. 7 33.

2007 Ra nk 1 2 5 4 N mm t 116 .4 35. 7 28. 6 31. 1 31. Company ArcelorMitt al Nippon Steel1 Baosteel Group POSCO Hebei Steel

2008 Ran k 41 42 43 44 45 m m t 6. 9 6. 9 6. 8 6. 5 6.

2007 Ra nk 40 41 43 39 44 m mt 7.4 7.3 6.9 7.8 6.8 Company Jiuquan Steel Salzgitter5 voestalpine Jianlong Group BlueScope

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3 6 7 8 33. 0 27. 7 24. 4 23. 3 23. 2 21. 8 20. 4 20. 4 19. 2 17. 7 16. 9 16. 0 15. 9 15. 0 14. 1 13.

A 3 11 6

1 34. 0 20. 2 26. 5 22. 9 21. 5 23. 8 20. 0 18. 6 17. 3 16. 2 17. 9 16. 2 17. 0 14. 2 13. 8 13.

Group JFE Wuhan Steel Group Tata Steel2 Jiangsu Shagang Group U.S. Steel Shandong Steel Group Nucor Gerdau Severstal Evraz Riva Anshan Steel ThyssenKr upp3 Maanshan Steel Sumitomo Metal Ind SAIL 46 47 48

5 6. 4 6. 4 6. 1 6. 1 6. 0 5. 9 5. 9 5. 7 5. 6 5. 4 5. 3 5. 2 5. 1 5. 0 4. 7 4. 46 47 60 6.4 6.4 5.2 Metalloinve st Beitei Steel Guofeng Steel SSAB

49

51

6.1

10 11 12 13 14 15 16 17 18 19 20 21

10 8 12 13 15 17 14 N A 16 18 20 19

50 51 52 53 54 55 56 57 58 59 60 61

56 54 52 53 42 61 56 57 N A 59 63 68

5.4 5.9 6.1 6.0 7.0 5.0 5.6 5.5 4.5 5.3 4.6 4.4

Erdemir AK Steel Mechel Nanjing Steel Ilyich Tonghua Steel Xinyu Steel HKM6 Sanming Steel CSN HADEED Tianjin Tiantie

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Group

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4.3.1

ARCELOR Mittal

ArcelorMittal is the world's number one steel company, present in more than 60 countries. It has led the consolidation of the world steel industry and today ranks as the only truly global steelmaker. ArcelorMittal is the largest producer of steel in Europe, North and South America, Africa, the second largest steel producer in the CIS region, and has a growing presence in Asia, particularly in China. ArcelorMittal has steelmaking operations in 20 countries on four continents, including 66 integrated, mini-mill and integrated mini-mill steelmaking facilities which provide a high degree of geographic diversification. ArcelorMittal is a successor to Mittal Steel, a business founded in 1989 by Mr. Lakshmi N. Mittal, the Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittal. It has experienced rapid and steady growth since then largely through the consistent and disciplined execution of a successful consolidation-based strategy. ArcelorMittal key financials for 2008 show revenues of $124.9 billion and crude steel production of 103.3 million tonnes, representing approximately 10% of world steel output. Products and Services ArcelorMittal is the only producer offering the full range of steel products and services. From commodity steel to value-added products, from long products to flat, from standard to specialty products, from carbon steel to stainless steel and alloys, ArcelorMittal offers a complete spectrum of steel products - and supports it with continuous investment in process and product research. Major products Fat steel products, long steel products, stainless steel, wire solutions, plates.

4.3.2

POSCO

The Pohang Iron and Steel Company, or POSCO, based in Pohang, South Korea, is the world's second largest steel maker by market value. POSCO operates two steel mills in the country, one in Pohang and the other in Gwangyang. In addition, POSCO operates a joint venture with U.S. Steel, USS-POSCO, which is located in Pittsburgh, California. The company makes hot- and cold-rolled steel products (plate steel, stainless steel, electrical steel, and wire rods), which it sells to the auto and shipbuilding industries. It produces more than 30 million tons of steel a year, making it the world's number 3 steelmaker behind the combined ArcelorMittal and Nippon Steel. Subsidiaries include POSCO Engineering & Construction (which builds steel plants, steel-related infrastructure, and energy facilities) and POSDATA (systems integration). The South Korean government privatized its stake in POSCO in 2001, ending the company's 30-year steelmaking monopoly. With the strong Korean shipbuilding and automobile industry dependent on POSCO for steel, it has been seen as the bedrock of Korea's industrial development over the past 40 years.

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Strategies POSCO has set its mid-term roadmap with an aim to rise over the challenge of global economic crisis by proactively coping with the ever-changing global markets. To that end, the company has come up with 10 initiatives and 100 action plans including emergency management system to overcome the economic crisis and customer-oriented marketing infrastructure. Performances In 2008, POSCO realized KRW 30,642.4 billion of sales, KRW 6,540.0 billion of operating profits and 33 million tons of crude steel Production. Despite the adverse economic circumstances, the company was able to achieve this historic business results, driven by its high-value added product line-up and low-cost production system. While expanding its facilities to achieve 41 million tons of crude steel annual production in its domestic location, POSCO continued to increase its overseas equity investments in Brazil, Australia. It also carried on with its global base expansion in Vietnam, China and the U.S. Sales Volume by Product 2008 Hotrolled steel (including PO) Plate Wire rod Coldrolled steel Electrical steel Stainless Steel Others Total 10,395 3,572 1,853 8,971 10,264 3,831 2,018 9,607 2009 Total (Unit: 1,000 tons) 2010 Domestic Export

10,700 4,593 2,020 10,416

7,809 4,355 1,663 6,064

2,891 238 357 4,352

659 1,885 1,208 28,543

907 1,609 1,345 29,581

932 1,306 1,198 31,165

481 744 1,076 22,192

451 562 122 8,973

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4.3.3

NPPON

Nippon Steel Corporation also referred to as Shinnittetsu, was formed in 1970. Nippon Steel Corporation is the world's second-largest steel producer in volume and the second most profitable steel company in the world. Nippon Steel was created by the merger of two giants, Yawata Iron & Steel and Fuji Iron & Steel into a juggernaut. The Nippon Steel Group undertakes the steelmaking and steel fabrication business as its mainstay operation. Underpinned by this backbone segment, Nippon Steel is developing business in five other segments: engineering and construction, urban development, chemicals, new materials and system solutions. The Company is accelerating initiatives toward establishing a structure with an annual crude steel production capacity of more than 40 million metric tons. At the same time, we are stringently adhering to the strategy of growing into a real global player in the steel industry. To accomplish these goals, the Group is constantly forging its core strengthsits technological edge and on-site expertise and capabilities. Sales (Tonnage) of Iron and Steel Products by Type of Products (1,000 tons) Years ended March 31 Steel products 29,595 31,514 32,90 0 28,20 0 2007 2008 2009 2010

Sections 4,458 Flat-rolled products 19,916 21,243 22,24 3 19,11 0 4416 4,798 4,082

Tabular, speciality steel products, secondary products

5,220

5,855

5,86 0

5,008

4.3.4

BAOSTEEL

Baosteel Group Corporation (hereinafter as Baosteel) is the most competitive steel complex in China at present. In 2008, Baosteel registered a sales revenue of RMB 246.839 billion

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yuan, a total profit of RMB 23.813 billion yuan, a total assets of RMB 352.497 billion yuan and a net assets of RMB 219.435 billion yuan; the total employees of Baosteel are 108914 people; Baosteel has been enrolled in Global 500 for 6 years consecutively and ranked 220th this year. The main steel business of Baosteel focuses on the production of hi-tech and high valueadded premium steel, with an annual production capacity around 30 million tons. Baosteel's products sell well at home and abroad. While maintaining its dominance in domestic flat product market, Baosteel's products are also exported to over 40 countries and regions including Japan, South Korea, Europe and America. Main Products Automobile Steel Electric Steel Stainless Steel Pipeline Steel Bearing Steel Ship Building Plate Oil Country Tubular Goods High Grade Construction Steel Household Electric Appliance Steel

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5. 5.1

CHAPTER FOUR The Indian Economy (An Overview) Highlights In 2008 crude steel production was 54.52 million tonnes, a growth of 1.23% over last year with capacity utilisation at 89% during the year. It grew at more than 9% annually from 38.72 million tonnes (MT) in 2003-04. Production for sale of total finished steel was at 56.39 million tonnes, a growth of 0.6% as compared to last year. As against 40.71 MT in 2003-04, an average annual growth of 7.3% was registered. Total finished steel exports decreased by 26 % as it reached an estimated 3.75 million tonnes while imports were at an estimated 5.77 million tonnes, a decline of 18 %. At 51.85 million tonnes, domestic consumption of total finished steel declined marginally by 0.53%. The growth was driven by capacity expansion from 43.91 million tonnes per annum (MTPA) in 2003-04 to 64.40 MTPA in 2008-09. The induction furnace route accounted for 32% of total crude steel production during 2008-2009. India is the fifth largest producer of crude steel in the world during 2008. India also maintained its lead position as the worlds largest producer of direct reduced iron (DRI) or sponge iron with nearly 20 million tonnes production in 200809. As per the revised estimates, the country is likely to achieve a steel production capacity of nearly 124 million tonnes by the year 2011-12. The steel sector is expected to generate additional employment of around 4 million by 2020 for production of around 295 million tonnes of crude steel by 2019-2020. 222 MoUs have been signed with various States for planned capacity of around 276 million tonnes.

5.1.1

Past & Present

The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the starting point of modern Indian steel industry. At the time of independence in 1947, India had only three steel plants the TATA Iron & Steel Company, the Indian Iron and Steel Company and Visveswaraya Iron & Steel Ltd and a few electric arc furnace-based plants. The period till 1947 thus witnessed a small but viable steel industry in the country, which operated with a capacity of about 1 million tonne and was completely in the private sector. From the fledgling one million tonne capacity status at the time of independence, India has now risen to be the 5th largest crude steel producer in the world and the largest producer of sponge iron. Till early 1990s, when economic liberalization reforms were introduced, the steel industry continued to be under controlled regime, which largely constituted regulations such as large plant capacities were reserved only for public sector under capacity control measures; price regulation; for additional capacity creation producers had to take license from the

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government; foreign investment was restricted; and there were restrictions on imports as well as exports. As it traversed its long history during the past 60 years, the Indian steel industry has responded to the challenges of the highs and lows of business cycles. The first major change came during the first three Five-Year Plans (1952-1970) when in line with the economic order of the day, the iron and steel industry was earmarked for state control. From the mid50s to the early 1970s, the Government of India set up large integrated steel plants in the public sector at Bhilai, Durgapur, Rourkela and Bokaro. The policy regime governing the industry during these years involved: Capacity Control Measures Licensing of capacity, reservation of large-scale capacity creation for the public sector units. Dual-Pricing System Price and distribution control for the integrated, large-scale producers in both the private and public sectors, while the rest of the industry operated in a free market. Quantitative Restrictions and High Tariff Barriers Railway freight equalisation policy: To ensure balanced regional industrial growth. Controls on imports of inputs, including technology, capital goods and mobilisation of finances and exports. The large-scale capacity creation in the public sector during these years contributed to making India the 10th largest steel producer in the world as crude steel production grew markedly to nearly 15 million tonnes in the span of a decade from a mere 1 million tonne in 1947. But the trend could not be sustained from the late 1970s onwards, as the economic slowdown adversely affected the pace of growth of the Indian steel Industry. However, this phase was reversed in 1991-92, when the country replaced the control regime by liberalisation and deregulation in the context of globalisation. The provisions of the New Economic Policy initiated in the early 1990s impacted the Indian steel industry in the following ways: Large-scale capacities were removed from the list of industries reserved for the public sector. The licensing requirement for additional capacities was also withdrawn subject to locational restrictions. Private sector came to play a prominent role in the overall set-up. Pricing and distribution control mechanisms were discontinued. The iron and steel industry was included in the high priority list for foreign investment, implying automatic approval for foreign equity participation up to 50%, subject to the foreign exchange and other stipulations governing such investments in general. Freight equalisation scheme was replaced by a system of freight ceiling. Quantitative import restrictions were largely removed. Export restrictions were withdrawn. The system, therefore, underwent marked changes. For steel makers, opening up of the economy opened up new channels of procuring their inputs at competitive rates from overseas markets and also new markets for their products. It also led to greater access to information on global operations/ techniques in manufacturing. This, along

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with the pressures of a competitive global market, increased the need to enhance efficiency levels so as to become internationally competitive. The steel consumer, on the other hand, was now able to choose items from an array of goods, be it indigenously manufactured or imported. This freedom to choose established the sovereignty of the consumer and galvanised steel producer to provide products/service levels in tune with the needs of the consumers. With the opening up of the economy in 1992, the country experienced rapid growth in steel making capacity. Large integrated steel plants were set up in the Private Sector by ESSAR Steel, Ispat Industries, Jindal Group etc. TATA Steel also expanded its capacity. To sum up, some of the notable milestones in the period were: Emergence of the private sector with the creation of around 9 million tonnes of steel capacity based on state-of-the-art technology. Reduction/dismantling of tariff barriers, partial float of the rupee on trade account, access to best-practice of global technologies and consequent reduction in costs all these enhanced the international competitiveness of Indian steel in the world export market. After 1996-97, with the steady decline in the domestic economys growth rate, the Indian steel industrys pace of growth slowed down and in terms of all the performance indicators- capacity creation, production, consumption, exports and price/ profitability- the performance of the industry fell below average. In foreign trade, Indian steel was also subjected to anti-dumping/ safeguard duties as most developed economies invoked non-tariff barriers. Economic devastation caused by the Asian financial crises, slowdown of the global economy and the impact of glut created by additional supplies from the newly steel-active countries (the steel-surplus economies of erstwhile USSR) were the negative factors. However, from the year 2002, the global industry turned around, helped to a great extent by China, whose spectacular economic growth and rapidly-expanding infrastructure led to soaring demand for steel, which its domestic supply could not meet. At the same time, recoveries in major markets took place, reflected by increase in production, recovery of prices, return of profitability, emergence of new markets, lifting of trade barriers and finally, rise in steel demand globally. The situation was no different for the Indian steel industry, which by now had acquired a degree of maturity, with emphasis on intensive R&D activities, adoption of measures to increase domestic per capita steel consumption and other market development projects, import substitution measures, thrust on export promotion and exploring global avenues to fulfil input requirements. The rapid pace of growth of the industry and the observed market trends called for certain guidelines and framework. Thus was born the concept of the National Steel Policy, with the aim to provide a roadmap of growth and development for the Indian steel industry. The National Steel Policy (NSP) was announced in November 2005 as a basic blueprint for the growth of a self-reliant and globally competitive steel sector. The long-term objective of the National Steel Policy is to ensure that India has a modern and efficient steel industry of world standards, catering to diversified steel demand. The focus of the policy is to attain levels of global competitiveness in terms of global benchmarks of efficiency and productivity. The national policy seeks to facilitate removal of procedural and policy bottlenecks that affect the availability of

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production inputs, increased investment in research and development, and creation of road, railway and port infrastructure. The policy focuses on the domestic sector, but also envisages a steel industry growing faster than domestic consumption, which will enable export opportunities to be realised. As per official estimates, the Iron and Steel Industry contributes around 2% of the Gross Domestic Product (GDP) and its weight in the Index of Industrial Production (IPP) is 6.20%. From a negligible global presence, the Indian steel industry is now acknowledged for its product quality, reflected by trends of rising exports. Growth of Steel Industry

5.1.2

The National Steel Policy 2005 had projected consumption to grow at 7% based on a GDP growth rate of 7-7.5% and production of 110 million tonnes by 2019-2020. These estimates will be largely exceeded and it is envisaged that in the next five years, demand will grow at a considerably higher annual average rate of over 10% as compared to around 7% growth achieved between 1991-92 and 2005-06. It has been assessed that, on a most likely scenario basis, the steel production capacity in the country by the year 2011-2012 will be nearly 124 million tonnes. The table below shows the trend in production for sale, import, export and consumption of total finished steel (alloy + non-alloy) in the country during the last six years: Total finished steel (alloy + non-alloy) (000 tonnes) Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Source: JPC Crude steel production has shown a sustained rise since 2003-04 along with capacity. Data on crude steel production, capacity and capacity utilisation is given in the table below: Crude steel Year 2003-04 2004-05 2005-06 2006-07 Capacity (000tonnes) 43910 47995 51171 56843 Production tonnes) 38727 43437 46460 50817 (000 Capacity Utilisation (%) 88 91 91 89 Production for sale 40709 43513 46566 52529 56075 56393 Import 1753 2293 4305 4927 7029 5775 Export 5207 4705 4801 5242 5077 3750 Consumption 33119 36377 41433 46783 52125 51850

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2007-08 2008-09 Source: JPC,

59845 64400*

53857 54520

91 85

*= 3 million tonnes capacity added in December 2008.

The growth was driven by capacity expansion from 43.91 million tonnes per annum (MTPA) in 2003-04 to 64.4 MTPA in 2008-09. Crude steel production grew at more than 8.16% annually from 38.72 million tonnes in 2003-04 to 54.52 million tonnes in 2008-09. Production of finished steel at 56.39 million tonnes during 2008-09 as against 40.71 million tonnes in 2003-04 at average annual growth rate of 7.7%. With growth in production for sale lagging behind consumption growth, India has turned into a net importer of finished steel in 2008-09. Exports also declined to ensure greater domestic availability. The above performance has been contributed largely by the strong trends in growth of the electric route of steel making, particularly the induction furnace route, which accounted for 32 per cent of total crude steel production in the country during 200809 and has emerged as a key driver of crude steel production. Percentage Share (%)

Crude Steel Production by Process Route Blast Oxygen Furnace (BOF) Electric Arc Furnace (EAF) Induction (IF) Total Source: JPC, Provisional Furnace

2003-04 57 16 27 100

2009-09* 47 20 33 100 *=

India is also a leading producer of sponge iron with a host of coal based units, located in the mineral-rich states of the country. Over the years, the coal based route has emerged as a key contributor to overall production; its share has increased from 60% in 2003-04 to 75% in 2008-09. Capacity in sponge iron making has also increased over the years and currently stands at 31 million tonnes.

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India is also an important producer of pig iron. Post-liberalisation, with setting up several units in the private sector, not only imports have drastically reduced but also India has turned out to be a net exporter of pig iron. The private sector accounts for nearly 87% of total production for sale of pig iron in the country.

5.1.3

Trends in Production

Steel Producers Broadly there are two types of producers in India viz. integrated producers and secondary producers. Integrated steel producers have traditionally integrated steel units have captive plants for iron ore and coke, which are main inputs to these units. Currently there are three main integrated producers of steel namely Steel Authority of India Limited (SAIL), Tata Iron and Steel Co Ltd (TISCO) and Rashtriya Ispat Nigam Ltd (RINL). SAIL dominates amongst the three owing to its large steel production capacity plant size. Secondary producers use steel scrap or sponge iron/direct reduced iron (DRI) or hot briquetted iron (HBI). It comprises mainly of Electric Arc Furnace (EAF) and Induction Furnace (IF) units, apart from other manufacturing units like the independent hot and cold rolling units, rerolling units, galvanizing and tin plating units, sponge iron producers, pig iron producers, etc. Secondary producers include Essar Steel Ltd., Ispat Industries Ltd., and JSW Steel Ltd. There are 120 sponge iron producers; 650 mini blast furnaces, electric arc furnaces, induction furnaces and energy optimizing furnaces; and 1,200 re-rollers in India. The integrated producers constitute most of the mild steel production in India. Their main products include flat steel products such as Hot Rolled, Cold Rolled and Galvanised steel. They also produce long and special steel in small quantities. On the other, secondary producers largely produce long steel products. Re-rollers are the units that come under secondary producers category, and produce small quantity of steel like long and flat products. These units either procure their inputs from the market or through their backward integrated plants. They use sponge iron, pig iron or combination to produce finished steel or ingots. Traditionally Indian steel industry has also been classified into Main Producers (SAIL plants, TATA Steel and Vizag Steel/RINL), Major Producers (plants with crude steel making capacity above 0.5 million tonnes Essar Steel, JSW Steel and Ispat Industries) and Other Producers. The latter comprises of numerous steel making plants producing crude steel/finished steel (long product/flat product)/ pig iron/ sponge iron and are spread across the different states of the country.

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The following table highlights the total as also the contribution of the private and public sector in crude steel production in the country: Indian Crude Steel Production (in million tonnes) 2005-06 Public Sector Private Sector Total Production % share of public sector Source: JPC, 15.912 27.525 43.437 36.6% 2006-07 16.964 29.496 46.460 36.5% 2007-08 17.003 33.814 50.817 33.5% 2008-09 17.091 36.766 53.857 32% 2009-10 16.374 38.146 54.520 30%

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Category-wise Production for Sale of Finished Steel (Non-Alloy) 2008-09 Categor y NonFlat Product s Bars & rods Structur als/Spl. Sec. Rails & Rly. Materia ls Total (Nonflat Product s) Flat Product s Plates H R Coils/S kelp/Str ips H R Sheets C R Coils/S heets/St rips GP/GC Sheets 268 8 470 7 136 9 897 7 201 0 405 7 116 74 249 8 457 7 149 5 973 0 330 0 399 3 110 07 531 3 100 3 951 148 75 404 0 135 201 88 504 3 108 6 518 6 935 155 00 421 0 165 206 86 514 5 117 7 M. P. Oth er IPT/ OC Tot al 2009-10 M. P. Oth er IPT/ OC Tot al

101 2

726 7

190 50

263 17

713 3

198 75

270 08

302 189 1

455 556 0 301 2

757 443 9

277 165 7

315 514 5 220 0

592 460 2

729

365 2

438 1

711

387 0

458 1

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Elec. Sheet Tin Plates T M B P Tin Free Steel Total (Flat Product s) Pipes (Large dia.) TOTA L (Finish ed Carbon Steel)

81 15

78 168 6

159 183 6 0

71 19

92 193

163 212 0 0

104 13

202 65

502 2

256 56

981 0

208 40

550 0

251 50

85

125 0 405 65 502 2

133 5 533 08

77

128 5 420 00 550 0

136 2 535 20

177 65

170 20

IPT/OC: Inter Plant Transfer/Own Consumption; TMBP: Tin Mill Black Plates; MP Main Producers. Provisional *=

Going Global Global crude steel production reached 1.33 billion tonnes in 2008, a decline of 1.2 percent over 2008. China was the largest crude steel producer in the world with production reaching 502 million tonnes, a growth of 2.6% over 2009. India, which was the eighth largest producer in 2003, had emerged as the fifth largest producer in 2006. In 2009, the country retained its rank as the fifth largest crude steel producing country in the world. India also emerged as the largest sponge iron producing country in the world in 2009, a rank it has held on since 2002. If proposed expansions plans are implemented as per schedule, India may become the second largest crude steel producer in the world by 2015-16.

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World Crude Steel Production Country China Japan United States Russia India South Korea Germany Ukraine Italy Rank 1 2 3 4 5 6 7 8 10 2010 (in million tonnes) 502 119 92 69 55 54 46 34 31

Source: World Steel Association. The rejuvenated steel market in the country has already witnessed the announcements of mega expansion plans of leading domestic producers in the form of Greenfield and/or Brownfield projects in different parts of the country. The decision of Posco, South Korea, to set up their 12 million tonnes integrated steel plant in Orissa has given the Indian steel industry a feel of what globalisation is all about, This was soon followed by Mittal Groups announcement of plans to set up their 12 million tonnes integrated steel unit in Orissa. However, the domestic Indian steel producers did not lag behind. Indian conglomerate TATA Steels $12 billion takeover of Anglo-Dutch giant Corus Group Plc, transformed TATA Steel Ltd. into the worlds 5th largest steel producer, which may well be regarded as a benchmark even in the history of the Indian steel industry. Such developments only prove that the Indian steel industry has entered a mature phase. Category-Wise Exports Category Semis (Non-Alloy) FINISHED STEEL (Non-Alloy) Bars & Rods Structurals Plates 387.0 89.4 149.8 329.0 75.0 106.5 213.0 73.0 153.0 161.0 73.0 190.0 200506 388.3 200607 665.3 200708 284.0 200809*

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H R Sheets/Coils C R Sheets/Coils GP/GC Sheets Electrical Sheets Tinplates Pipes Total Finished Steel (Non-Alloy) Total Steel (Non-Alloy) Total Steel (Alloy) Pig Iron Sponge Iron *provisional

1371.1 450.5 1842.6 24.4 43.0 120.0 4477.8 4866.1 323.0 440.1 42.3

1580.3 386.4 2173.3 1.5 37.0 203.5 4892.5 5557.8 349.0 706.7 55.6

1391.0 510.0 20206.0 25.0 36.0 200.0 4627.0 5000.0 450.0 560.0 38.6

943.0 327.0 1530.0 7.0 82.0 169.0 3482.0 4036.0 261.0 261.0

Indian Steel Industry, 2008-09* Item Total Finished Steel Production for Sale Import Export Capacity Utilisation Source: JPC, Provisional Quantity (mt) 56.39 5.72 3.66 89% % Change 0.6% -19.0 -28.0 *=

5.1.4

Future Outlook

India is the only major economy expected to show positive growth in steel use in 2009. Indian consumption is forecast to grow about 2% (WSA). Besides achieving the rank of the 5th largest global crude steel producer, India has also made a mark globally in the production of Sponge Iron/Direct Reduced Iron. Domestic crude steel production grew at a compounded annual growth rate of 7 per cent during 2004-05 to 2008-09. The increase in production came on the back of capacity expansion, mainly in the private sector plants, and higher utilisation rates. This growth was driven by both capacity expansion (from 47.99 million tonnes in 2004-05 to approximately 64 million tonnes in 2008-09) and improved capacity utilisation. India, the worlds largest producer of direct reduced iron (DRI) or sponge iron, is also expected to maintain its lead in the near future.

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Sponge iron production grew at a CAGR of 16% to reach a level of 20.80 million tonnes in 2008-09 compared to 12.36 million tonnes in 2004-05. India is expected to become the second largest producer of steel in the world by 2015-16, provided all requirements for fresh capacity creation are met. Courtesy a mushrooming growth of coal-based sponge iron units in key mineral-rich pockets of the country, domestic production of sponge iron increased rapidly, enabling the country to achieve and maintain the number one position in the global market. With a series of mega projects, either being implemented or at the proposal stage, which once operational will re-write the structure of the steel industry and its dynamics; and a domestic economy carrying forward the reform process further, the future of the Indian steel industry is definitely optimistic.

5.2

Major Players of Indian Steel Industry

5.2.1

NMDC LTD

NMDC (National Mineral Development Corporation) is a Mini-Navratna enterprise of the Government of India , incorporated on November 15, 1958 and is engaged in the business of developing and harnessing mineral resources of the country (other than coal, oil, natural gas and atomic minerals). Presently, its activities are concentrated on mining of iron ore, diamonds and silica sand. NMDC operates the large mechanised iron ore mines in the country at Bailadila (Chhattisgarh) and Donimalai (Karnataka).

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All the iron ore production units have been accredited with ISO 9001:2000 and ISO 14001:2004 certifications and the R&D centre of NMDC has also been accredited with ISO 9001:2000 certification. NMDC is an integral part of the Indian steel industry as it provides the required raw material for steel production.

5.2.2

RASHTRIYA ISPAT NIGAM LIMITED (RINL)

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 tonnes per annum (MTPA) of liquid steel. The plant has been built to match international standards with state-of-the-art technology, incorporating extensive energy saving and pollution control measures. VSP has an excellent layout capable of expanding up to 16 MTPA. Within a short period of time since its commissioning, the plant achieved high levels of performance in production and technological norms. 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. RINL registered a sale of Rs. 10,458 crore (estimated) during 2008-09 surpassing the level of Rs. 10,433 crore achieved in 2007-08. Sales in the domestic market stood at Rs. 10,379 crore and exports at Rs. 79 crore during 2008-09. By producing over 20.08 lakh tonnes of value added steel products during the financial year 2008-09, VSP registered a growth of 6% over the corresponding period of last year. Special Steel sales volume of 19.81 lakh tonnes has been achieved for the year 2008-09, which is 8.4% higher than that of the last year i.e. 2007-08. During 2008-09, sales through District Level Dealers has been 42,000 tonnes, representing a growth of 23% over the last year, i.e., 2007-08. During the current financial year 2008-09, based on the estimated figures, the company has registered a net profit of Rs. 1,307.76 crore (after tax).

5.2.3

ISPAT Industries Limited

Ispat Industries Limited (IIL) is one of the leading integrated steel makers and the largest private sector producer of hot rolled coils in India. Set up as Nippon Denro Ispat Limited in May 1984 by founding chairman Mr M L Mittal, IIL has steadily grown into a Rs 9,400crore company, assuming its position as flagship of the reputed Ispat Group, a corporate powerhouse with operations in iron, steel, mining, energy and infrastructure. Headquartered at Mumbai, IIL employs a total of 3000 people and is the leader in the national speciality steel market. The company's core competency is the production of high quality steel, for which it employs cutting edge technologies and stringent quality standards.

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It produces world-class sponge iron, galvanized sheets and cold rolled coils, in addition to hot rolled coils, through its two state-of-the art integrated steel plants, located at Dolvi and Kalmeshwar in the state of Maharashtra. The sprawling 1,200 acres Dolvi complex houses the 3 million tonne per annum hot rolled coils plant, that combines the latest technologies - the Conarc process for steel making and the compact strip process (CSP) - introduced for the first time in Asia. IIL is expanding its HRC capacity to 3.6 million. With investments of over US $2 billion, IIL is the seventh largest Indian private sector company in terms of fixed assets.

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5.2.4

TATA STEEL LIMITED

Established in 1907, Tata Steel is India's largest integrated private sector steel company. The company is backward integrated with owned iron ore mines and collieries. With its competitive advantage in raw materials, efficient operations and the benefits of a recentlycompleted $2.3 billion programme of modernisation, Tata Steel is among the lowest cost steel producers in the world. Its steel plant at Jamshedpur produces four million tonnes of hot and cold rolled flat and long products. 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 (rerolled bars), Tata pipes, Tata bearings, Tata Wiron (galvanised wire products) and Tata Agrico (hand tools and implements). Production & Sales

Figures in ooo tonnes December 2008 Items Hot Metal Crude Steel Saleable Steel Sales 566 494 651 600 2009 % Change 15 21 FY09

1699 1497

334

592

77

1235

368

636

73

1071

The crude steel production of TATA Steel during the period 2008-09 was 5.6 million tonnes which is higher by 12% over the production of 5.0 million tonnes last year. The saleable steel production was at a higher level during the period April 2008-March 2009 (5.3 million tonnes) compared to the corresponding period last year (4.9 million tonnes).

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5.2.5

ESSAR STEEL LIMITED

Essar Steel Ltd., the Indian company of Essar Steel Holdings Limited, is the largest steel producer in western India, with a current capacity of 4.6 MTPA at Hazira, Gujarat, and plans to increase this to 8.5 MTPA. The Indian operations also include an 8 MTPA beneficiation plant at Bailadila, Chattisgarh, which has the worlds largest slurry pipeline of 267 km to transport beneficiated iron slurry to the pellet plant, and an 8 MTPA pellet complex at Visakhapatnam. The Essar Steel complex at Hazira in Gujarat houses the worlds largest gasbased single location sponge iron plant, with a capacity of 4.6 MTPA. The complex also houses the steel plant and the 1.4 MTPA cold rolling complex. The steel complex has a complete infrastructure setup, including a captive port, lime plant and oxygen plant. ESSAR Steel is a fully integrated flat carbon steel manufacturerfrom iron ore to ready-tomarket products with. It is a global producer of steel with a footprint covering India, Canada, USA, and Asia. Essar Steel utilises Hot Briquetted Iron-Direct Reduced Iron (HBI-DRI) technology supplied by Midrex Technology, USA along with four 150 tonnes DC electric arc furnaces imported from Clecim, France. The Hazira unit of Essar Steel is equipped with 5.5 million tonnes per annum (MTPA) hot briquetted iron plant, 4.6 MTPA electric arc furnace, 4.6 MTPA continuous caster, 3.6 MTPA hot strip mill and 1.4 MTPA cold rolling mill. During the year 2007-08, Essar was awarded costs ISO/TS 16949 and OHSAS 18000 certification. ESSAR Steel is India's largest exporter of flat products, selling almost one-third of its production to the highly demanding US and European markets, and to the growing markets of South East Asia and the Middle East. Some of the major client companies are Caterpillar, Hyundai, Swaraj Mazda, the Konkan Railway and Maruti Suzuki.

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5.2.6

JSW STEEL LIMITED

JSW Steel is a 6.8 million tonnes per annum (MTPA) 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 which entails steel making through the following process route: BOF-continuous casting of slabs hot strip rolling cold rolling mills. JSW Steel has the distinction of being certified ISO-9001:2000 Quality Management System, ISO-14001:2004 Environment Management System and OHSAS 18001:1999 Occupational Health and Safety Management System. The Brownfield expansion plan of the Vijayanagar plant is in progress and is likely to be completed by 2010, with a total installed capacity of 9.6 MTPA. Domestic revenue increased 18% from Rs. 9,022 crores in 2007- 08 to Rs. 10,681 crores in 2008-09. This significant increase was due to the increased focus on the domestic market pursuant to the slump in global economies in the second half of 2008-09. The Company strengthened its dealership network across India which enabled it to market its products on a Pan-India basis. Crude Steel Output up by 3% to 3.724 million tonnes in 2008-09. The Company has export footprint in over 100 countries. Majority of the exports comprised value added products. Interestingly, in the first half of 2008-09, export realisations ware higher than that of domestic market as the steel industry voluntarily agreed with Government of India to hold back the hike in steel product prices in the local market. JSW Steel, Tarapur and Vasind Works JSW Steel Tarapur and Vasind Works specialise in down-streaming facilities which include: 1.0 MTPA cold rolling, 0.9 MTPA hot dip galvanising (HDG), 0.1 MTPA colour coating, 0.1 MTPA CRCA products and 0.3 MTPA hot rolled plates capacity. JSW Steel has a distinction of being certified to ISO-9001:2000 Quality Management System

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6. 6.1

CHAPTER FIVE Steel Authority of India Limited The Steel Authority of India Limited (SAIL) is a company incorporated on January 24, 1973, registered under the Indian Companies Act, 1956 and is a Maharatna enterprise of the Government of India. Mr. S. K. Roongta is the Chairman of this company which has an annual production of 13.5 million metric tons making it the 16th largest steel producer in the world. Ranked amongst the top ten public sector companies in India in terms of turnover, SAIL is a fully integrated iron and steel maker. It manufactures and sells a broad range of steel products, including: Hot and cold rolled sheets and coils, Galvanised sheets, electrical sheets Structural 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. It produces both basic and special steel for domestic engineering, railways, power, construction, defence and automotive industries and for sale in export markets also. The five integrated steel plants are at Bhilai (Chattisgarh), Rourkela (Orissa), Durgapur (West Bengal), Bokaro (Jharkhand), and Burnpur (West Bengal). While, the three special and alloy steels plants are Alloy Steels Plant at Durgapur (West Bengal), Salem Steel Plant at Salem (Tamil Nadu) and Visveswaraya Iron and Steel Plant at Bhadravati (Karnataka)

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. Capital Structure The authorised capital of SAIL is Rs. 5000 crore. The paid-up capital of the company was Rs. 4130.40 crore as on March 31, 2009, out of which 85.82% is held by the Government of India and the balance 14.18% by the financial institutions/GDR-holders/banks/employees/individuals etc.

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

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The company recorded turnover of Rs. 48,681 crore in the financial year 2008-09. The posttax net profit for the year was Rs. 6,175 crore. The company has paid interim dividend @ 13% of paid up equity capital for the year 2008-09. Further, subject to approval of shareholders, the Board of Directors has recommended a final dividend @ 13% of the paidup equity, thus making the total dividend @ 26% of paid-up capital for the year.

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SAIL has a country wide network of over 2000 dealers. This ensures availability of quality steel in virtually all the districts of the country. Guiding Principles of SAIL

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The company shall: Create a positive footprint within the society to make a meaningful difference in the lives of people by continually aligning its initiatives to the goals for sustainable development. Maintain commitment to quality, health and safety in every respect of the business and people. Undertake ethical business practices across the supply chain. Make positive impact on the environment and promote good Environmental practices. Promote equality of opportunity and diversity of workforce throughout its business operation.

Major Policies of SAIL Quality Policy We shall build and sustain a world class organization, where quality is the hallmark of every process and activity. With the involvement and dedication of our human recourse, we are committed to achieve satisfaction of all our stakeholders, through innovation and continual improvement. Safety Policy Steel Authority of India Limited (SAIL) is committed to: Safety of its employees and the people associated with it including those living in the neighborhood of its plants, mines and units. Pursue safety efforts in a sustained and consistent way by establishing safety goals, demanding accountability for safety performance and providing resources to make safety programmes work. Corporate Social Responsibility Policy SAIL recognizes that its business activities have direct and indirect impact on the society. The Company strives to integrate its business values and operations in an ethical and transparent manner to demonstrate its commitment to sustainable development and to meet the interests of its stakeholders. The Company is committed to continuously improving its social responsibilities, environment and economic practices to make positive impact on the society. Achievements Golden Peacock Award for Combating Climate Change 2008 for BSP, Occupational Health and Safety 2008 for BSL. SAIL also featured in the 2008 list of Forbes Global 2000 companies at position 647. National Institute of Personnel Management conferred the National Award on SAIL for Best HR Practices 2008.

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SAIL was adjudged as the top Indian company under the Iron and Steel Sector for the Dun & Bradstreet Rolta Corporate Awards 2008.

Environmental Awards and Accolades SAIL plants have been awarded various prizes for environmental management in their plants during the last three years viz. 6.2 Golden Peacock special appreciation for CSR, first in Indian Steel Industry, Sustainabilit Award, 2006, organized by CII, New Delhi, Golden Peacock Innovation Award, 2006 instituted by IOD, New Delhi, Greentech Gold Award in metal sector for outstanding achievements in Environment Management for the year 2007 for BSP and RSP, Golden Peacock Environment Environment Management Award, 2007 for BSP, Indira Gandhi Memorial Excellent Pollution Control Award, Jawaharlal Nehru Memorial Excellent Pollution Control Implementation Award and Golden Peacock Innovative Product/ Service Award for eco innovative services.

Product Mix of SAIL Hot Rolled Coils Hot Rolled Coils, Sheets and Skelp Hot rolled coils, sheets and skelp (narrow coil), are the largest product category of the company in terms of both sales volume and revenue. Hot rolled coils are primarily used for making pipes and have many direct industrial and manufacturing applications, including the construction of tanks, railway cars, bicycle frames, ships, engineering and military equipment and automobile and truck wheels, frames and body parts. Hot rolled coils are also used as feedstock for cold rolling mills where they undergo further processing. Hot rolled coils are also delivered to the company's own cold rolling mills and silicon sheet mill and pipe plant in a wide range of widths and thicknesses as the feedstock for higher value-added steel products. The company is the largest producer of hot rolled coils, sheets and skelp in India.

Col d Rolled Products Cold rolling of hot rolled products produces a superior surface finish, improves the physical properties of the steel, such as tensile strength, and

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reduces its thickness to precise gauges. As a result, cold rolled products generally command higher prices than hot rolled products. The products of the cold rolling mill include cold rolled sheets and coils, which are used primarily for precision tubes, containers, bicycles, furniture and for use by the automobile industry to produce car body panels. Cold rolled products are also used for further processing, including for colour coating, galvanizing and tinning. The company also produces further processed cold rolled products, including galvanized sheets and tin plates. Plates Steel plates are used mainly for the manufacture of bridges, steel structures, ships, large diameter pipes, storage tanks, boilers, railway wagons and pressure vessels. The company also produces weatherproof steel plates for the construction of railcars. The company is currently the largest producer of steel plates in India with a domestic market share of more than 80 per cent for these products. The company is the only producer of wide and heavy plate products in India.

Semi-Finished Products

produces semi-finished products, including billets and slabs, which are converted into products in the company's processing plant lesser extent, sold to re-rollers for finished products.

The company blooms, finished and, to a conversion to

Structural

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Structural steel products are produced through a process of hot rolling in the section or structural mills. They are long steel products with cross sections of various shapes. I-beams, channels and angle steel are used in mining, the construction of tunnels, factory structures, transmission towers, bridges, ships railways and other infrastructure projects. Bars and Rods The company produces steel bars and rods through a process of hot rolling billets in the finishing mills. Reinforcement steel and wire rods are primarily used by the construction industry. The company is one of the largest producers of reinforcement bars in India which are primarily sold to the construction industry. Speciality Products Speciality products include electrical sheets, tin plates and pipes. Electrical sheets are cold rolled products of silicon steel for electrical machinery. Tin plates are cold rolled steel electrolytic ally coated with tin for food packaging. Pipes are longitudinally or spirally welded from hot rolled coils for conveying such things as water, oil and gas. Alloy and Stainless Products In addition to the steel products indicated above, SAIL produces a wide range of alloy steel products at ASP,SSP and VISL. Elements including chromium, nickel, vanadium and molybdenum are used in the alloy mixture to impart special properties to steel. These alloy steels are primarily used for sophisticated applications, including in the automobile, railway and defence industries. A wide variety of alloy and stainless steel plates, hot rolled sheets, cold rolled sheets, bars, billets, blooms, forgings and die blocks are manufactured at ASP in an Electric Arc Furnace. SAIL is able to produce different qualities of alloy steels to meet the requirements of its customers. To increase steel's corrosion resistance properties, nickel and chromium are used in the making of stainless steel. SSP produces cold rolled stainless steel coils and sheets with thickness ranging from 0.3 mm to 6 mm and width ranging from 500 mm to 1,250 mm. These materials can be produced in a large number of grades for different applications. Stainless steel products are used for diverse applications including household utensils, automobile trims, conveyor belts, elevators, chemical and food processing equipment, building and interior decoration and pharmaceutical equipment. Product Mix, Product-Wise Semis Long Products Blooms, Billets & Slabs Structurals Crane Bars, Rods & Wire Rods Rails Rebars

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Flat Products

HR Coils, Sheets & Skelp Plates CR Coils & Sheets GC Sheets\ GP Sheets and Coils Tinplates Electrical Steel Pipes Rails Wheels, Axles, Wheel Sets

Tubular Products Railway Products

The product category-wise sales turnover during 2008-09 was as follows: Products Category Saleable Steel: Flat Products Long Products PET (Pipes, Electrical sheets, Tin plates) Products Integrated Steel Alloy & Special Steel Plants Plants 90.2 4.8 95.0 5.0 100 % of sales value 49.4 39.1 1.7

Total Saleable Steel Secondary products (ingots, pig iron, scrap, coal chemicals etc.) Total

6.3

Major Plants & their Production Plant-Wise Products Blooms, Billets & SlabsBeams Channels, Angles Bhilai Steel Plant Crane Rails Plates Rails Pig Iron, Chemicals & Fertilisers

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HR Coils & Sheets Plates Bokaro Steel Plant CR Coils & Sheets GP Sheets & Coils/ GC Sheets Pig Iron, Chemicals & Fertilisers Blooms, Billets & Slabs Joists, Channels, Angles Durgapur Plant Steel Bars, Rods & Rebars Skelp Wheels, Axles, Wheel Sets Pig Iron, Chemicals & Fertilisers HR Coils Plates CR Coils & Sheets Rourkela Steel Plant GP Sheets/ GC Sheets Tinplates Electrical Steel Pipes Pig Iron, Chemicals & Fertilisers Salem steel plant Stainless steel

6.3.1

Bhilai Steel Plant

Bhilai Steel Plant (BSP) is an Integrated Steel Plant and India's sole producer of rails and heavy steel plates and major producer of structural. The plant is the sole supplier of the country's longest rail tracks of 260 metres. With an annual production capacity of 3.153 MT of saleable steel, the plant also specializes in other products such as wire rods and merchant products. Since BSP is accredited with ISO 9001:2000 Quality Management System Standard, all saleable products of Bhilai Steel Plant come under the ISO umbrella. Bhilai IS0:14001 has been awarded for Environment Management System in the Plant, Township and Dalli Mines. It is the only steel plant to get certification in all these areas. The Plant is accredited with SA: 8000 certification for social accountability and the OHSAS-

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18001 certification for Occupational health and safety. These internationally recognised certifications add value to Bhilai's products and helps create a place among the best organizations in the steel industry. Among the long list of national awards it has won, Bhilai has bagged the CII-ITC Sustainability award for three consecutive years. Bhilai Steel Plant PRODUCT-MIX Semis Rail & Heavy Structural Merchant Products (Angles, Channels, Round & TMT bars) Wire Rods (TMT, Plain & Ribbed) Plates (up to 3600 mm wide) Total Saleable steel TONNES/ANNUM 5,33,000 7,50,000 5,00,000 4,20,000 9,50,000 31,53,00

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6.3.2

BOKARO STEEL PLANT

Bokaro Steel Plant an Integrated Steel Plant, is hailed as the countrys first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and knowhow. Its first Blast Furnace started on 2nd October 1972 and the first phase of 1.7 MT ingot steel was completed on 26th February 1978 with the commissioning of the third Blast Furnace. Bokaro is designed to produce flat products like Hot Rolled Coils, Hot Rolled Plates, Hot Rolled Sheets, Cold Rolled Coils, Cold Rolled Sheets, Tin Mill Black Plates (TMBP) and Galvanised Plain and Corrugated (GP/GC) Sheets. Bokaro has provided a strong raw material base for a variety of modern engineering industries including automobile, pipe and tube, LPG cylinder, barrel and drum producing industries. Bokaro Steel is working towards becoming a one-stop-shop for world-class flat steel in India. The modernisation plans are aimed at increasing the liquid steel production capacity, coupled with fresh rolling and coating facilities. The new facilities will be capable of producing the most premium grades required by the most discerning customer segments.

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6.3.3

DURGAPUR STEEL PLANT

Set up in the late 50's with an initial annual capacity of one million tonnes of crude steel per year, the capacity of Durgapur Steel Plant (DSP) was later expanded to 1.6 million tonnes in the 70's. A massive modernisation programme was undertaken in the plant in early 90's, which, while bringing numerous technological developments in the plant, enhanced the capacity of the plant to 2.088 million tonnes of hot metal,1.8 million tonnes crude steel and 1.586 million tonnes saleable steel. The entire plant is covered under ISO 9001: 2000 quality management system. The modernized DSP now has state-of the-art technology for quality steel making. With the successful commissioning of the modernized units, DSP is all set to produce 2.088 million tones of hot metal, 1.8 million tones of crude steel and 1.586 million tones of saleable steel annually. It is situated on the banks of the Damodar river. The Grand Trunk Road and the main Calcutta-Delhi railway line pass through Durgapur. DURGAPUR STEEL PLANT PRODUCT-MIX Merchant Products Structural Skelp Wheels & Axles Semis Total Saleable steel TONNES/ANNUM 2,80,000 2,07,000 1,80,000 58,000 8,61,000 15,86,000

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6.3.4

Rourkela Steel Plant

Rourkela Steel Plant (RSP), the first integrated steel plant in the public sector in India, was set up with German collaboration with an installed capacity of 1 million tonnes. Subsequently, its capacity was enhanced to 1.9 million tonnes. RSP presently has the capacity to produce 2 million tonnes of hot metal, 1.9 million tonnes of crude steel and 1.67 million tonnes of saleable steel. It is SAILs only plant that produce silicon steels for the power sector high quality pipes for the oil & gas sector and tin plates for the packaging industry. Its wide and sophisticated product range includes various flat, tubular and coated products. Almost all major units of the plant, including its Personnel Department and Steel Township, are certified to ISO:9001 standards. Being situated on the Howrah-Mumbai rail mainline, Rourkela is very well connected with most of the important cities of India. The nearby airports are Ranchi (173 km), Bhubaneswar (378 km) and Kolkata (413 km). Rourkela also has an airstrip maintained by RSP. PRODUCT-MIX Plate Plates HR Plates 3,98,000 HR Coils 75,000 ERW Pipes 55,000 SW Pipes 4,33,000 CR Sheets & Coils Galvanized Sheets (GP& GC) Electrolytic Tin-Plates Silicon Sheets Steel 1,60,000 85,000 73,500 16,71,000 Mill TONNES/ANNUM 2,99,000 92,500

Total Saleable Steel

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Products HR Coils Plates Chequered Plates CR Sheets & Coils

Applications LPG cylinders, automobile, railway wagon chasis and all types of high strength needs. Pressure vessels, ship engineering structures building and

Flooring & staircases in the industrial installations, railway platforms, etc. Steel furniture, white goods like refrigerators, washing machines, automobile bodies, railway coach panelling, drums, barrels, deep drawing and extra deep drawing,etc Roofing, panelling, industrial sheeting, air conditioner ducting and structural Containers for packaging of various products including edible oils, vegetables and confectionary items.

Galvanised Sheets

Electrolytic Tin Plates Silicon Steel sheets & Coils

Small generators, stators for high efficiency rotating equipment and relays, etc. High pressure transportation of crude oil, natural gas and slurry transportation, water supply, sewage disposals, grain silos, civil engineering pilings, etc. High pressure transportation of oil & water, sewage disposal, tube wells, etc.

Spiral Weld pipes

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6.3.5

Alloy Steels Plant

The pioneer in the production of alloy and special steels. Alloy Steels Plant (ASP), Durgapur was commissioned with an initial capacity of 1,00,000 tonnes of ingot steel and 60,000 tonnes of saleable steel. Through two phases of expansion and modernization, the capacity has been revised to 2.46 lakh tonnes of liquid steel and 1.78 lakh tonnes of saleable steel. ASP has the capacity to produce Slabs, Blooms, Bars, Plates and Forged items of over 400 grades in a wide range of sizes. ASP is equipped with state-of-the-art technology for producing world-class quality alloy and special steels. is specially designed for casting special steels like Austenitic and Ferritic stainless steel and a variety of non-stainless steels including bulletproof steel. The continuous casting machine is equipped with a state-of-art ElectroMagnetic Stirrer in its mould for casting Blooms. It also produces value added items like Cold Rolling Mill rolls, Concast rollers, crane wheels, springs, hammers, grate bars, hot saw blade, shear blade, bright bar, stainless steel liner plate, etc. ASP is also supplying import substitution item components to many customers through established conversion agents. ISO-9001 (2000) certification for the entire plant.

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6.3.6

MAHARASHTRA ELEKTROSMELT LTD.

Maharashtra Elektrosmelt Ltd (MEL) is a Subsidiary of Steel Authority of India Ltd, a Government of India Enterprise and the largest Manganese based Ferro Alloy producer in the country. MEL has an installed capacity of 1,00,000 TPY equivalent Ferro Manganese. The product range of MEL includes High Carbon Ferro Manganese, Silico Manganese and Medium/Low Carbon Ferro Manganese. It is accredited with Quality Assurance Certificate ISO 9001:2000. MEL's major infrastructure facilities include two nos. of 33 MVA Submerged Electric Arc Furnaces for the production of ferro alloys, Manganese Ore Sintering Plants, Furnace gas based Power Plant and one small Electric Arc Furnace for the production of MC/LC Ferro Manganese with Lime Calcination and Manganese Ore Roasting Unit.

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6.3.7

PLANT WISE EXPORT PRODUCTS Sr. No. 1. PRODUCT Billets Billets Billets 2. 3. 4. 5. 6. 7. 8.. 9. 10 11. 12. Cold-rolled Coils Cold-rolled Sheets Electrical Steels Galvanized Coils Hot-rolled Coils Hot-rolled Coils Hot-Rolled Plates/Sheets Pig Iron Reversing Mill Plates Reversing Mill Plates Rails Wire Rods Customized Products PLANT Bhilai Steel Plant Durgapur Steel Plant IISCO Steel Plant Bokaro Steel Plant Bokaro Steel Plant Rourkela Steel Plant Bokaro Steel Plant Bokaro Steel Plant Rourkela Steel Plant Bokaro Steel Plant IISCO Steel Plant Bhilai Steel Plant Rourkela Steel Plant Bhilai Steel Plant Bhilai Steel Plant Service Centre

6.3.8

PLANT-WISE FINANCIAL PERFORMANCE Plant/Unit Bhilai Steel Plant (BSP) Durgapur Steel Plant (DSP) Rourkela Steel Plant (RSP) Bokaro Steel Plant (BSL) IISCO Steel Plant (ISP) Alloy Steels Plant (ASP) Salem Steel Plant (SSP) 2008-09 4,965.45 754.25 1,011.20 1,292.78 -182.36 -110.25 2.82 2007-08 5,366.37 1,008.61 1,401.33 2,830.43 -285.19 2.69 102.74

(Rs. in Crore)

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Visvesvaraya Iron & Steel Plant (VISL) Central Units/RMD SAIL: Profit Before Tax (PBT) SAIL: Profit After Tax(PAT) 6.3.9 Joint Ventures

-149.29 1,818.85 9,403.45 6,174.81

-58.79 1,100.54 11,468.73 7,536.78

6.3.9.1 S&T Mining Company Pvt. Ltd SAIL has incorporated a joint venture company with TATA Steel for joint acquisition & development of coal blocks/mines. New indigenous opportunities for coking coal development are being explored by the Joint Venture company for securing coking coal supplies.

6.3.9.2 NTPC SAIL Power Company Pvt. Ltd (NSPCL) A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal Power Corporation Ltd. (NTPC Ltd.); manages the captive power plants at Rourkela, Durgapur and Bhilai with a combined capacity of 314 megawatts (MW). It has installed additional capacity by implementation of 500 MW (2 x 250 MW Units) power plant at Bhilai. The commercial generation of 1st Unit has commenced in April2009 and the 2nd Unit in October 2009.

6.3.9.3 Bokaro Power Supply Company Pvt. Limited (BPSCL) This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in January 2002 is managing the 302-MW power generating station and 660 tonnes per hour steam generation facilities at Bokaro Steel Plant. BPSCL has proposed to expand its capacity by installing 2x250 MW coal based thermal unit at Bokaro. In addition, construction activities are underway for installation of 9th Boiler (300T/Hr) & 36 MW Back Pressure Turbo Generator (BPTG) project at Bokaro.

6.3.9.4 SAIL&MOIL Ferro Alloys (Pvt.) Limited SAIL has incorporated a joint venture company with M/s Manganese Ore (India) Ltd on 50:50 basis to produce ferro-manganese and silico-manganese required for production of steel.

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6.3.9.5 Bhilai JP Cement Ltd SAIL has incorporated a joint venture company with M/s Jaiprakash Associates Ltd to set up a 2.2 MT slag based cement plant at Bhilai. The company shall commence cement production at Bhilai by March'2010, whereas clinker production at Satna shall start within 2009.

6.3.9.6 Bokaro JP Cement Ltd SAIL has incorporated another joint venture company with M/s Jaiprakash Associates Ltd to set up a 2.1 MT cement plant at Bokaro utilizing slag from BSL. The project implementation is under progress with commencement of cement production likely by July2011.

6.3.9.7 MOUs SAIL has the following MOUs with: Larsen & Toubro Ltd (L&T) To jointly set up, develop, manage and own captive/independent power plant(s) at suitable location/s to meet future power requirements of SAIL including opportunities to own captive thermal coal blocks to cater to the power plants requirements. Rashtriya Ispat Nigam Ltd. (RINL)- To jointly explore and develop low silica limestone mines in the Sultanate of Oman. POSCO To establish strategic alliance for cooperation in a wide range of business & commercial interest areas. IIM, Ahmedabad and Management Development Institute (MDI), Gurgaon- for knowledge sharing, Siemens Ltd- for manpower training.

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6.3.10 CENTRAL UNITS OF SAIL Central Coal Supply Organization (CCSO) Central Coal Supply Organization (CCSO), a unit of SAIL, is situated in Dhanbad District of Jharkhand and has branch offices at Kolkata, Asansol, Adra and Bilaspur. The major functions of CCSO are as follows Actual assessment of quality of coking coal at loading points by proper sampling and analysis. Linkage of raw coal from BCCL and CCL to TATA and Chasnalla washeries for enhancing washed coal. Finalization of long term and short term MoU with the coal companies. Centralized payment and settlement with the coal companies. Study of different coking coal with Central Mines and Fuel Research Institute (CMIFR), Digwadih and RDCIS, Ranchi for its usage.

CCSO looks after the daily movement of Indigenous washed coking coal and boiler coal to SAIL steel plants; BSP, RSP, DSP, BSL and ISP by continuous follow up and liaison with the CIL subsidiaries such as Bharat Coking Coal Limited (BCCL), Dhanbad, Central Coalfields Limited(CCL), Ranchi, Western Coalfields Limited (WCL), Nagpur, Eastern Coalfields Limited (ECL), Sanctoria (W.B), South Eastern Coalfields Limited (SECL), Bilaspur, Mahanadi Coalfields Limited (MCL), Sambalpur (Orissa) and different Railway Zones. R&D Centre for Iron and Steel The Research & Development Centre for Iron & Steel (RDCIS) at Ranchi is the corporate R&D unit of SAIL. Set up in 1972, the Centre has ISO: 9001 certification to its credit. It undertakes R&D projects in diverse realms of Iron & Steel Technology under the categories of Plant Performance Improvement (PPI), Product Development (PD), Scientific Investigation and Development (SID), Basic Research (BR) and Technical Services. RDCIS has more than 300 dedicated and competent scientists and engineers and its laboratory is equipped with around 300 sophisticated diagnostic research equipment and 5 pilot plant. RDCIS also offers technological services to various organizations in the form of Know-how transfer of technologies developed by RDCIS Consultancy services; Specialized testing services; Contract research; Technology Awareness Programmes. RDCIS Clientele includes Tiajpromexport, Russia DSI, USA MSCO, Iran Tata Steel Ltd., Jamshedpur BHEL-WRI, Tiruchirappalli Southern Railway, Chennai.

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Foolad Technic, Iran EISCO, Egypt SAIBIC, Soudi Arabia DRDL, Hyderabad IGCAR, Kalpakkam RINL, Visakhapatnam MECON Ltd., Ranchi CIL, Kolkata Growth Division

NINL, Bhubaneshwar Indian Oil Corp., R&D, Faridabad Hindustan Petroleum Corp., Mumbai Balmer Lawrie & Co. Ltd., Kolkata VSSC, Thiruvananthapuram RDSO, Lucknow Uttam Galva Steels Ltd., Khopoli Jindal Steel & Power Ltd., Raigarh

Growth Division (GD) functions as a nodal agency for manufacture and supply of various spare parts and equipment to the SAIL Plants by utilizing available in-house facilities and vendor base. GD functions focus on effective utilization of the engineering shops in the steel plants. Main objectives of GD are: Effective utilization of captive engineering facilities of each steel plant. Providing technical help to manufacture specified equipment to cater to present requirement as well as long-term expansion and modernization. Undertake projects within SAIL plants or outside.

Centre for Engineering & Technology Center for Engineering & Technology (CET), an ISO: 9001 certified organization, is the design, engineering & consultancy unit of SAIL. It has its Head Office at Ranchi, Sub Centres at Bhilai, Durgapur, Rourkela, Bokaro, Burnpur & Bhadravati, Unit Offices at Bangalore, New Delhi for formulation of Interplant Standards for Steel Industry. As a solution provider for all project needs, CET had been rendering complete range of services not only to the Steel Plants under SAIL but also to various clients other than SAIL both within and outside the country. Some of the important clients other than SAIL include EGITALEC (Egypt), Ashok Steel (Nepal), Chittagong Steel Mills (Bangladesh), Birla Copper, Mukand Ltd., Jindal Vijayanagar Steels Ltd., National Iron & Steel Co., Hindustan Zinc Ltd., National Mineral Development Corporation and Romelt- SAIL (India) Ltd The range of services includes conceptualization, project evaluation & appraisal, project consultancy, design & engineering and project management in the areas of iron and steel making CET represents a reservoir of technical & managerial expertise inherited over four decades of Indian Steel Industry. It has kept pace with changing times and made continuous efforts for updating skills of engineers through planned HRD programmes, other professional organization of repute and acquiring up-to-date hardwares & softwares for engineering work. All of these are blended with a concern for clients profitability to ensure that the clients get the most cost effective solution, tailor- made for their requirement.

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6.4

Central Marketing Organization Central Marketing Organization (CMO), headquartered in Kolkata, is Indias largest industrial marketing set-up. It markets carbon steel produced by the five integrated steel plants of SAIL. This ISO 9001:2000 certified organization transacts its business through a network of 37 Branch Sales Offices spread across the four regions, 25 departmental Warehouses equipped with mechanized handling systems, 42 Consignment Agents and 26 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 crossing 2,000, SAIL's wide marketing spread ensures availability of quality steel in virtually all the districts of the country. CMO through its joint venture partner M/s Metal Junction has simplified steel buying by providing net based facilities through its on line e store, providing door delivery facilities to small housebuilders. A strong IT support system enables real-time network connectivity within the entire CMO network. Extensive customer contact, product and segment specialization, close monitoring of order servicing and feedback analysis through a Customer Satisfaction index are established norms at CMO. The customer-friendly approach of CMO is backed by practical after-sales service. Through the process of Key Account management, CMO provides singlewindow service to key customers across the country for every business transaction from enquiry to order booking, order tracking to delivery, and even consultancy and after-sales service

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International Trade Division International Trade Division (ITD) an ISO 9001:2000 accredited unit of CMO based in New Delhi undertakes exports of Mild Steel products and Pig Iron from SAILs five integrated steel plants. Ever ready to meet the exacting demands of its global customers, ITD maintains a close liaison with customers and the production units to cater to the Customized requirements of its customers both in terms of quality and sizes. ITD undertakes export of SAILs varied product basket which includes, Rails, Structurals, Merchant Products, Wire Rods, Re-Bars, Plate Mill Plates, Hot Rolled Coils, Hot R. Plates/ Sheets, Cold Rolled Steels, Galvanised Steels, Cold Rolled Non Oriented (CRNO) coils, Chequered Plates, Slabs, Billets and Pig Iron. ITD has successfully established SAILs brand name globally. Some of the major countries where ITD has exported SAILs products are as follows: Japan, China, Korea, Taiwan, Vietnam, Philippines, Singapore, Malaysia, Thailand, Indonesia, Australia, Europe (UK, Germany, France, Belgium, Italy, Spain, Netherlands, Portugal), Sudan, Oman, UAE and the neighbouring countries such as Bangladesh, Sri Lanka and Nepal.

The Transport & Shipping Division of CMO headquartered at Kolkata with its branch offices at Haldia, Paradip, Vizag and Kolkata ports, ensures timely import of the key ingredient in steel making, coking coal and handles its entire logistics. It also caters to other plant imports and ensures efficient dispatch of steel exports. T&S Division is accredited with ISO 9001:2000 certification.

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SAILS DOMESTC MARKET Sales in Domestic Market in the period 2008-2010

Sales
1 3 10 Billet Plate HR 52 34 Rod TMT

SAILs Global Reach SAILs products have found ready acceptance in about 75 countries the world over. Products exported to various countries include Mild Steel Billets, Slabs, Wire rods, Structurals, Hotrolled Plates/Coils/Sheets, Cold-rolled Coils/Sheets, Rails, CRNO Steels and Pig Iron. SAILs Mild Steel and Pig Iron exports are undertaken by its International Trade Division (ITD) based in New Delhi. Being a manufacturer of world-class steel products, SAIL offers to its customers a wide product profile matched with excellent service, and a choice ranging from widely traded items like Hot Rolled Coils to specialty products like CRNO steels. Annually it produces over 12 million tonnes of various steel products, to meet the exacting requirements of both domestic as well as overseas customers. Its vision for the future encompasses a presence in major markets of the world.

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Exports 1999-2008 in MT

SAILs export data shows a declining trend. In 2008-09 SAILs export became almost half of its exports in 2003-04. This decline can be attributed to increase in domestic demand and prevailing uncertainty in the international financial market. Another reason of the decline in exports is aggressive exports from SAILs competitors like TATA Steel.

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Product-Wise % of Export, 2007-08

H R Coil Export, 1999-2008 in MT

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Steel Authority of India Limited International Trade Division New Delhi Highlights of Export Performance for 2008-09 Turnover (in crore):o 2008-09: Rs. 841.2 o 2007-08: Rs. 1152 Export Volume (in M/T):o 2008-09: 251530 o 2007-08: 471890 Share of Neighbouring Markets in Total Exports:o 2008-09: 54.58% o 2007-08: 50.35% o 2006-07: 56.46% New Markets Explored:o BQ Plates: Kuwait, Uganda. o HT Plates: South Africa, Bangladesh. o GC Sheets: Myanmar. Special Grade Products Exported:o BSP High Tensile Plates. o BSP Ship Building Plates. New Initiative:o New Product exported: first ever export of BQ Plates, GC Sheets. o 1st Time Export of SAIL Plates to African & Gulf Countries. o Export of Plates to America resumed after 10 years.

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QUALITY OBJECTIVES International Trade Division Steel Authority of India Limited 2009-10 TO ACHIEVE 0.635 MILLION TON OF EXPORT SALES. TO RESPOND TO CUSTOMERS ENQUIRY WITHIN ONE WORKING DAY. TO ACHIEVE A MINIMUM CSI OF 85%. TO ACHIEVE ATLEAST 50% EXPORT QUANTITY IN THE NEIGHBOURING COUNTRIES. TO EXPORT TO TWO NEW COUNTRIES WHERE NO EXPORTS DONE IN THE LAST THREE YEARS. TO EXPORT ATLEAST ONE NEW PRODUCT NOT EXPORTED IN THE LAST THREE YEARS. TO ACHIEVE REDUCTION IN PENDING DEMURRAGE DISPATCH CLAIMS AS ON 1/4/09 BY 10%.

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6.4.1 SWOT ANALYSIS OF SAIL Strength The diversified product mix and multi location production units are an area of strength for the company. SAIL as a single source is able to cater to the entire steel requirement of any customer. Also it has a nation wide distribution network with a presence in every district in India. This makes quality steel available throughout the length and breadth of the country. SAIL has the largest captive iron ore operations in India, which takes care of its entire requirement. With plans in place to expand the mining operations, the company will continue to be self sufficient in iron ore after completion of the present phase of expansion. SAIL's captive power plants take care of about 60% of its total power need. With augmentation of capacities of power plants operated under Joint Venture, the company will continue to have security in this key input in future as well. SAIL's large skilled manpower base is a source of strength. There is emphasis on skill based training in the company. The expanded capacity will be operated with more or less similar number of employees in future. In fact, with selective recruitment and regular attrition on account of superannuation, the number of employees is likely to come down over time; while there will be improvement in overall skill set. The company has one of the biggest in-house research and development centres in Asia. SAIL's RDCIS (Research &Development Centre for Iron & Steel) is a source of regular product and process innovation. Low overall borrowings lend strength to the company's balance sheet as it can mobilize resources while keeping the leveraging at manageable levels. Weakness SAIL is dependent on the market purchase for a key input coking coal. As India does not have sufficient coking coal deposits, most of the supply is from external sources. As international practice in purchase of coking coal is through annual price contract it exposes the company to market risk if the steel prices crash but input prices remain unchanged.A large manpower base results in higher manpower cost as a proportion of turnover for the company. Although there has been significant reduction in manpower through natural and voluntary separations, the manpower strength in SAIL is still higher than the industry average. A part of the operations in the company continue to be from Energy inefficient processes viz. open hearth and ingot route of production, which will be eliminated only after the completion of the current expansion program. At present around 20% of the products are in the form of semi - finished steel, resulting in lower value addition. New rolling mills planned under expansion plan will contribute to value addition as almost all semis will be converted to finished steel. SAIL being a Public Sector unit has to follow set procedures in conducting its business. On occasions, it slows down the decision making with attendant fallout. Opportunities SAIL has five main integrated Steel Plants which have a combined capacity of 12.5 million tonnes of crude steel and 10.74 million tones of saleable steel with modernized facilities available to meet diverse customized requirements in terms of quality, size, grade, delivery etc. The current per capita finished steel consumption in the country is approx. 44 kg as compared to the likely world average of around 190 kg. There is a substantial scope for

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increase in domestic steel consumption. Although during 2008-09, steel consumption contracted by 1.2% in the country, steel demand in India is poised to grow at a modest pace with thrust on infrastructure in the 11th Plan period. Approval to 37 infrastructure projects worth Rs.70,000 crore between August 2008 and January 2009 is likely to trigger steel demand. Expectations of 6%-7% growth in GDP in 2008-09 with possibility of its returning to higher growth trajectory in 2009-10, higher elasticity of steel demand with respect to growth in GDP due to investment in plant and machinery and push to construction activities are expected to boost steel demand. The size range and quality makes SAIL'S long products a preferred choice for project customers. In case of flat products, SAIL remains a major supplier of HR Coils to the tube making sector and is slowly increasing its presence in cold reducing segment. The Plates from SAIL are rated amongst the best and are in good demand from project Customers. India is emerging as a major hub, both for the automobile and for the auto components sector. The water supply and oil & gas sectors are the other segments where there is a large growth potential. The modernized ERW Pipe Mill at Rourkela Steel Plant is able to cater to the requirement of these sectors. Bokaro Steel Plant and Bhilai Steel Plant are also producing small quantities of API grade HR Coil and Plates for servicing these sectors. SAIL has undertaken its expansion plan keeping these opportunities in mind. The recessionary business environment while imposing a great challenge has also led to new pockets of opportunity. All the companies that are in the midst of expansion plan can take up capital projects at much more competitive rates than feasible earlier. With a number of companies deferring their projects in the wake of uncertain demand, the competition in the equipment supplying industry has intensified, leading to reduction in project cost. Lowering of commodity and metals prices is also going to bring down the cost of capital projects. SAIL is in the midst of its expansion plan which after completion will add 10 million tonnes to its saleable steel capacity. The expansion plan will enable the company to increase the proportion of high value steel to more than 50% from the existing level of slightly more than 30%. Induction of rolling mills will eliminate the proportion of semis in SAIL's product-mix, around 20% as of now, and enable enhancement in value realization. Also, new products being introduced will help in supplying state of art products to railways, construction, auto, and oil & gas segments. Slowdown in general economic activity has also made the cost of coking coal and other mines abroad more affordable. This is likely to give a sustained advantage in the long run. Threats International prices of steel dropped by over 60% from their peak level in July, 2008. With import duty at 5%, and poor demand from developed countries, cheap imports are on an increase into the country putting pressure on realisation of the domestic steelproducers. Although green field expansion plans have suffered a setback due to implosion of demand, brown field capacities are coming up in the country. Some of the steel majors have added capacities during 2008- 09 and some new capacities are likely to come on-line by 2009-10. Greenfield capacity expansions will re-emerge sooner in India compared to other countries due to positive signs of demand prospects. There is substantial excess capacity for galvanised products in the country, which necessitates its exports in good volumes. Due to setback in export, the domestic market is suffering a negative impact and which has also had a cascading effect on Cold Rolled & Hot Rolled coils. With significant excess capacity in the global steel industry during 2009 there is a threat of dumping cheap steel to India which is

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likely to be the only major steel consuming nation with a positive growth. Clearance and renewal of mining lease, which involve multiple agencies at the State and Central levels, are an area of concern. Delay in opening new mines, and / or expanding existing mines may constrain raw materials availability, thereby impacting growth in saleable steel production, and overall economics of operation. Law and order situation in mining areas in some of the states is also a cause of concern for smooth operations in remote areas.

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Hot rolling Semi-finished products called blooms, billets and slabs are transported from the steelmaking plant to the rolling mills. In many plants steelmaking and rolling are both carried out on the same site. However there are also many stand-alone rolling mills (some are independently owned while others are part of a larger group but located away from the steelmaking works). Steel products can be classified into two basic types according to their shape: flat products and long products. Slabs are used to roll flat products, while blooms and billets are mostly used to roll long products. Billets are smaller than blooms, and therefore are used for the smaller type of long product. Uniquely, at Corus' Teesside works, slabs are used ingeniously to roll large long products (such as beams). Semi-finished products are first heated in a re-heat furnace until they are red hot (around 12000 C). On all types of mill the semi-finished products go first to a roughing stand. A stand is a collection of steel rolls (or drums) on which pressure can be applied to squeeze the hot steel passing through them, and arranged so as to form the steel into the required shape. The roughing stand is the first part of the rolling mill. The large semi-finished product is often passed backwards and forwards through it several times. Each pass gradually changes the shape and dimension of the steel closer to that of the required finished product. Plate mills Slabs are used to make plate. Typically, after leaving the plate mill's roughing stand, they are passed through a finishing stand. This is a reversing mill: like on the roughing stand, the steel is passed backwards and forwards through the mill. It is also turned 900 and rolled sideways at one stage during the process. Plate is a large, flat piece of steel perhaps 10mm or 20mm thick (although it can be up to 50mm thick) and up to 5 metres wide. It is used for example to make the hulls and decks of ships or to make large tanks and boilers. It can also be rolled up and welded to form a large steel tube, used for oil and gas pipelines. Strip mills Slabs are also used to make steel strip, normally called hot rolled coil. After leaving the roughing stand, the slab passes continuously through a series of finishing stands which progressively squeeze the steel to make it thinner. As the steel becomes thinner, it also of course becomes longer, and starts moving faster. And because the single piece of steel will be a whole range of different thicknesses along its length as each section of it passes through a different stand, different parts of the same piece of steel are travelling at different speeds. This requires very close control of the speeds at which each individual stand rolls; and the entire process is controlled by computer. By the time it reaches the end of the mill, the steel is travelling at about 40 miles per hour. Finally the long strip of steel is coiled and allowed to cool. Hot rolled strip is a flat product which has been coiled to make storage and handling easier. It is a lot thinner than plate, typically a few millimetres thick, although it can be as thin as 1mm. Its width can vary from 150mm to nearly 2 metres. It frequently goes through further stages of processing such as cold rolling and is also used to make tubes (smaller tubes than those made from plate).

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Long product mills Blooms and billets are used to make long products. After leaving the roughing stand, the piece of steel passes through a succession of stands which do not just reduce the size of the steel, but also change its shape. In a universal mill, all faces of the piece of steel are rolled at the same time. In other mills, only two sides of the steel are rolled at any one time, the piece of steel being turned over to allow the other two sides to be rolled. Long products are so called because they come off the mill as long bars of steel. They are however produced in a vast range of different shapes and sizes. They can have cross-sections shaped like an H or I (called joists, beams and columns), a U (channels) or a T. These types of steel "section" are used for construction. Bars can have cross-sections the shape of squares, rectangles, circles, hexagons, angles. These bars can also be used for construction, but many types of bar are also used for engineering purposes. Rod is coiled up after use and is used for drawing into wire or for fabricating into products used to reinforce concrete buildings, as are some types of bar. Other types of long product include railway rails and piling. Some long product mills make unique shapes of steel to a customer's individual specification. These are known as special sections. Cooling In all rolling processes, cooling the steel is a critical factor. The speed at which the rolled product is cooled will affect the mechanical properties of the steel. Cooling speed is controlled normally by spraying water on the steel as it passes through and/or leaves the mill, although occasionally the rolled steel is air-cooled using large fans. Further processing Hot rolled products can undergo many forms of further processing before they are finally used to make an end-product (such as a steel-framed building or a consumer product). Such processing includes: Cold rolling and drawing Fabricating - Steel sections are cut, welded and otherwise prepared to form the steel frame of a building. Rods and bars are similarly cut and shaped to form the steel reinforcement for concrete buildings. Coating Cutting and slitting - Service centres cut steel into many complex shapes. Profiling - Sheet steel may be pressed into the correct shape for crash barriers or the cladding of buildings (known as profiling)

HOT ROLLED COILS

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Demand Demand for flat products from mills in European markets has held up well during the summer slowdown, and appears to have exceeded supply during August in southern Europe. It is now essential that this firmer demand continues during September and into Q4. The producers appear to be anticipating stronger off-take as they begin to schedule higher production. Prices have been easing for flat products in Asia, while US producers have announced further increases for September. Flat products end-user sectors, such as automotive and appliances, continue to improve. Sentiment among buyers globally appears uncertain that demand will be strong enough to maintain these higher prices, but de-stocking may be finishing for most products. Long products demand remains weaker than expected, except in Asia where prices are increasing, while prices are just firmer in Europe and steady but under pressure in US. Even if demand improves, production may increase too quickly, especially if Chinese exports hit the international market. Producers of flat products in US announced increases of US$ 60/short ton during August which consolidated the earlier rises, but actual demand was weak and these increases may reduce demand further. The cutbacks on last years production levels have had the necessary effect, but the sharp increase in Julys output, expected to continue in August and September, could overwhelm demand. Flat products prices in northern Europe have hardly risen during August, despite the leading mills seeking increases of Eur 20-30/tonne for Q3. Real demand has been fair, but will need

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to improve further towards the end of the third quarter as destocking should be coming to an end. The mills output cuts from last years levels have been sufficient to bolster the market so far, but the leading producers are aiming to increase production in apparent expectation of firmer demand. There will be pressure for the price increases to hold this time, aided by further announced rises, and prices should slowly improve if demand returns to levels seen before the holiday period. Meanwhile HR, CR and HDG coil prices in southern Europe have been steadily rising during August after reaching a low-point earlier in the year. Prices should be able to at least hold steady and possibly move upwards from these levels, unless mills output exceeds demand. All coil prices are now back to similar levels to those in northern Europe. Demand has been reasonable during the last few weeks, with reduced production leading to firmer prices. For buyers in South East Asia, all coil prices have been slipping steadily during August, with HR coil prices falling US$ 40-50/tonne. Chinese export prices have dropped sharply to earlier levels in line with domestic pricing and so will become competitive in some markets. Volumes exported remain low so far this year, but are expected to increase strongly in Q4. Domestic HR and CR coil spot prices in China have fallen sharply during August, as the market undergoes a correction after the strong gains of the summer months. Apparent domestic demand had been very firm, but it appears that a proportion may have been speculatively bought and led to increased stock levels. PRICES Flat products prices are being increased in US by the producers with another US$ 60/short ton rise, but have slipped in South East Asia. All northern European coil prices have been just firmer during August. Southern European prices have risen more strongly from their earlier decreases and deeper lows. Price levels of Chinese exports of HR coil are being reduced, so they are likely to be appearing in some international markets. Prices in USA have risen by US$ 30/short ton during August, but the next increases will take HR coil prices up to the US$ 600/st (US$ 661/t) level. As demand is still not very strong, there may be resistance to these levels later in Q4, though rising scrap prices may help some of the increases to stick. Inventory levels in US continue to be low, but there is still scope for further reduction as the year-end approaches. CR Coil prices increased from US$ 520- 560/st (US$ 573-617/t) and should reach US$ 600-640/st (US$ 661-705/t) in September. HD Galvanised coil should also increase to US$ 620-660/st (US$ 683-727/t). South East Asian HR coil prices were around US$ 40/t below July price levels at US$ 550580/tonne cfr. Chinese suppliers HR Coil export offers are easing down to US$ 530-550/t fob in August, and should fall further to attract export business in September. CR and HDGalvanised coil prices in SE Asia both rose slightly, but buyers began to hold off expecting the weaker Chinese market to be reflected in their suppliers asking prices. CR Coil is now at US$ 700-730/t cfr in SE Asia during August and likely to ease in September. HDGalvanised coil prices were also firmer at US$ 770-800/t. Flat producers in northern Europe saw spot prices hardly gain during August even though they had announced higher prices. Spot demand had improved towards the end of Q2, but it is unclear whether it will return to this level during September and Q4.

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HR Coil prices in northern Europe were just higher at Eur 420-475/t (US$ 602-681/t) during August but should slowly increase in September. CR Coils were also just higher at Eur 480520/t (US$ 688-745/t). HD Galvanised products prices have increased the most, Eur 40/tonne, and are now in the range Eur 580-640/t (US$ 831-917/t). However, southern European prices have increased more strongly after falling further, but price levels are now similar to those in northern Europe. The Spanish and Italian mills decreased output during July and (probably) August, which helped to match the lower demand. Prices should also increase slowly in September unless import activity increases. HR Coil prices are now at Eur 380-400/t (US$ 545-573/t), while CR Coil prices are Eur 440460/t (US$ 631-659/t). HDGalvanised Coil prices were also firming at Eur 430-460/t (US$ 616-659/t) during August and expected to continue to rise going into September.

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Application of HR Coils Parts for precision equipment. Kitchen utensils, Containers, Tanks. Oil refinery or Paper industry equipment, Suitable for welding. Nitric acid tanks, heat resistant parts. Chemical, dye, paper & food processing industry equipment. Chemical plant equipment, heat exchanger. Chemical plant equipment, heat resistant parts, parts for aero industry. Chemical industry equipment, heat resistant parts, parts for aero industry. Kitchen utensils & tableware, stove pipes, building materials, car parts. Exterior decoration for cars. Turbine blades & parts. Knives, mechanical parts, shaft. Knives, rulers, scissors. For making different types of Blades like razor blades and surgical blades. Beer Barrels Cooling Coils Cryogenic Vessels and Components Dairy Equipment Evaporators Feed water Tubing Food handling Equipment Hypodermic Needles Milking Machines Nuclear Vessels & Components Pressure Vessels Sanitary Fittings and Valves Shipping Drums Still Tubes Textile Dying Equipment

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Galvanized steel coil is used for Automobile Industries. Galvanized steel coil is used for Washing Machines, Bathroom Doors, Agriculture, Roofing, Ducting, and Rolling Shutters. Galvanized steel coil is also used for Electrical Appliances, Containers etc.

6.5

Findings Crude steel production has shown a sustained rise since 2003-04 along with capacity. India is the 5th largest steel producer with the total of 55 million tonnes of steel. SAIL is at 21st position in the world, in terms of total steel production. In 2008-09 SAILs export became almost half of its exports in 2003-04. This decline can be attributed to increase in domestic demand and prevailing uncertainty in the international financial market. SAIL is more focused on fulfilling the domestic demand rather than international. While Flat items are not expected to witness a significant revival in consumption in 2009-10, Long products would continue to spur major demand in the steel sector during the year.

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6.6

Recommendations SAIL CAN PLAY A GREATER AND MORE ACTIVE ROLE IN THE WORLD STEEL MARKET. SETTING UP OF AN EXPORT OFFICE IN SOUTH-EAST ASIAN COUNTRIES LIKE THE ONE IN NEPAL. BRAND PROMOTION QUALITY CONTROL SO AS TO OFFER WORLD CLASS PRODUCTS REDUCTION IN IMPACT ON ENVIRONMENT

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6.7

Conclusion During the first 9 months of 2009, India stands as the 3rd largest curde steel producer in the world, next only to China and Japan. In other words, Indian steel, it can be stated without exaggeration, has emerged as a key player in the global steel scenario. On a similar term, the steel consumption in India has also been rising consistently in the range of 9-13%, over the past 5 years, with an average annual growth rate of 9.6%. If this growth is sustained, our per capita steel consumption will cross 100 Kg figure by the 2015, up from 47 Kg currently. In the developing economic background of India, the domestic steel consumption is driven mostly by growth in construction, housing and infrastructure sectors. Nearly 50% of the steel consumed in India is construction oriented. The balance is consumed by automobile, consumer goods and other diverse utilities. India, currently produces a large varities of steel products ranging from basic grades to highly sophisticated steel materials for satellites and nuclear reactors. We have the required technology and manpower skill available for delivering the quality designs to meet all types of required applications of steel. As a matter of fact, the current phase of modernization and expansion of Public Sector Steel Units, aims not only in expanding production capacities, but also in diversifying the product base in qualitative terms. One of the major reasons for our low per capita steel consumption is the lack of focus on vast rural sectors. As per the last survey carried out, about 5-6 years back, the per capita steel consumption in rural sector used to be two kilogram per annum. There is definitely some improvement over the last 2-3 years, considering that a large number of infrastructure and rural housing projects have been taken up under various schemes of the Government. But, there is an urgent need for a large scale improvement in rural steel consumption in the country. Steel usage most innovate itself, until now, the steel product innovation has been solely depending upon the Architects and Design Engineers. To overcome this limitation, I urge upon the steel industry to be proactive in steel application designs. Better quality and lower cost of application will certainly be acceptable by the users by way of value offers. This will be one of the most positive ways of improving steel consumption. The Research and Design (R&D) in steel sector should put higher emphasis on steel intensive product innovations and design applications. For steel to be acceptable, in preference to other replacements, the common man must find that it is affordable and is cost effective. In this regard, the stability of price of steel in the market plays a very important role. The steel producers must keep this aspect in mind, while

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deciding on the market price of common varieties of steel, used for mass consumption by common man. The steel industry should be profitable over the complete business cycle. It rewards shareholders and re-invests in new products and processes. Steel companies minimise their environmental footprint and conduct their operations in a sustainable way. The steel industry has strong growth potential in developing and industrialised countries. Steel is a high-tech industry with skilled people working in a safe environment. It attracts bright people to follow a career in steel. It aims to be an accident-free industry. Steel is the most innovative, recyclable and sustainable material of the 21st century. A sustainable steel industry in a sustainable world

6.8

Bibliography Ministry of Steel, GOI. Ministry of Commerce & Industry, GOI. Reports & Publications of UNCTAD, IMF, World Bank. Indian Council for Research on International Relations. World Steel Association. The Japan Iron & Steel Federation. Websites Export Promotion Councils. Annual Reports of ArcelorMittal, Nippon, Baosteel, Posco. Annual Reports of TATA Steel, Essar Steel, Ispat Industries, JSW.

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