Indian Steel Industry
Glorious present, glittering future

- By Sanjay Sengupta

     The Indian steel industry has recorded remarkable performance in recent years. The industry is now capable of producing high quality materials to stringent international specifications for high end applications in sectors like construction, engineering, automobile and infrastructure. Indian steel products have been well accepted in the global market and the country’s export of finished steel crossed the 5 Mt mark in Fy’04 at 5.22 Mt. which was about 14.4 percent of its total domestic production.

     Higher production of value-added products, capacity expansion, up gradation of production process achieve cost effective production in an environment friendly manner, have been the major thrust areas of the Indian steel producers in the recent times.

Production
     The production for the Indian steel industry between 2001-02 and 2003-04 are presented in Table 1.
It is evident from the aforementioned table that
(a) The average yearly growth of finished steel production in India between 2001-02 and 2003-04 was 9.06 percent.
(b) The average yearly growth of long products between 2001-02 and 2003-04 was 7.84 per cent while that of flat products was 9.96 percent.
(c) The share of flat products in the total production of finished steel increased from 57.3 per cent in 2001-02 to 58.2 percent in 2003-04
(d) The share of semi-finished steel in the total production of saleable steel (semis plus finished steel) has come down to 22.04 percent in 2003-04 from 23.79 percent in 2001-02.
(e) The average yearly growth in production of pig iron, Sponge Iron, Structurals, Rly. Materials, HR Coils / Skelp, CR Sheet / Coils was more than 10 percent between 2001-02 and 2003-04.

Exports
     Exports of steel products by India during 2002-03 and 2003-04 are tabulated in table – 2.
It is observed that the percentage share of export in the total domestic production of all the above categories has increased in 2003-04 over the previous year. The growth in finished steel export in 2003-04 was about 15.87 per cent as compared to FY’03 the growth in export of flat products was 16.41 per cent. Export of HR coils and GP/GC sheets led the way with 1.72 Mt and 1.44 respectively. Most of the GP/GC sheets were exported to China.

Imports
     The imports figures of steel materials for 2002-03 and 2003-04 are shown in Table – 3.
It is evident that percentage of import in apparent consumption has declined incase of semi-finished steel and long products while it has gone up for flat product due to higher domestic demand. Major imports in flat products were plates – 0.6 Mt, HR coils – 0.45 Mt and CR sheets / coils – 0.2 Mt.

India – A net exporter of finished steel
     India has been a net exported of finished steel for many years. The net exports of finished steel between 1999-2000 and 2003-04 are shown below:

Demand & apparent consumption of finished steel India
     The demand and apparent consumption scenario in respect of finished steel products are presented in Table 4.
     It is observed from the above table that the average annual growth in finished steel consumption in India between 2000-01 and 2003-04 has been about 4.78 per cent.

India’s target for 100 Mt steel production by 2018
     The National Steel Policy has set a target of 60 Mt of steel production by 2010 and to further increase it to a level of 100 Mt by 2018. The major steel producers in India are planning to expand their capacities in tune with the National Steel Policy formulations. Some major expansion programmes of the leading steel producers in the country are mentioned below :
(i) Steel Authority of India (SAIL) has planned to add 1 Mtpy of its 12 Mtpy capacity by 2004-05. The company has planned a seven million tonne capacity addition by 2011-12 to take its total capacity to 20 Mtpy by that period. SAIL has decided to spend Rs. 25,000 crore by 2011-12. The capital expenditure envisaged would double SAIL’s finished steel output to 16.6 Mtpy from the present level of 8.6 Mtpy. While the hot metal production will reach about 20 Mtpy by 2011-12 crude steel output will be around 28.7 Mtpy from the present level of 11.83 Mtpy. SAIL has earmarked Rs. 4,300 crore for its priority schemes to be completed by 2006-07.
     The hot metal production at SAIL’s Bhilai Steel Plant will rise to 7 Mtpy from the current level of 4 Mtpy and that Durgapur Steel Plant will increase to 3.2 Mtpy from the present 1.98 Mtpy. Similarly, Rourkela’s hotmetal production will go up to 3 Mtpy by 2011-12 from 1.73 Mt at present and the same for Bokaro will reach 6.5 Mtpy from 4.1 Mtpy at present.
     Mr. V. S. Jain, Chairman, SAIL, has explained that the massive growth plan would not affect the company’s financials as the SAIL Board has already envisaged a policy to maintain the debt-equity ratio at 1:1. The capital expenditure will be financed through internal accruals and will be aided by market borrowings, if required.
     SAIL has planned to gradually reduce the volume of semi-finished steel products share in the total production of saleable steel to 4 percent by 2011-12 as against 20 percent at present.
The capital expenditure plan includes upgradation and modernization of some of the existing assets as well as installation of new facilities. SAIL will develop and modernize its iron ore mines with special thrust on Chirra mines. Extensive plans has also been drawn up to revamp the company’s iron and steel units at its plants at Bhilai, Durgapur and Bakaro.
(ii) Tata Steel is implementing an expansion of 1 Mtpy to be completed by the end of 2005 which will take into capacity at Jamshedpur to 5 Mtpy. The company has planned to invest Rs. 7,800 crore over the next five year to raise its capacity by another 2.4 Mtpy to a total of 7.4 Mtpy by 2009. The bulk of the cost will be met through long-term internal accruals and long term borrowings.
     Tata steel will also invest between Rs. 12,000 to 15,000 crore to set up a 6 Mtpy steel plant Duburi in Orissa. The company has also planned on developing the Rs.2,000 crore Dhurma Part project which will be built along with Larsen and Toubro and other partners. The company will also lay a railway line to connect it to the Paradip port. (iii) RINL’s Vizag Steel Plant has decided to take its present rated capacity of 3.5 Mtpy of liquid steel to 5 Mtpy by 2007-08 in its phase I expansion plan at a cost of Rs. 2,500 crore mainly through internal accruals and process upgradations.
(iv) Ispat Industries Ltd has planned to increase its production capacity at its Dolvi plant in Maharashtra from 2.5 Mtpy to 3.2 Mtpy in 2004-05 at an investment of Rs. 1,000 crore. With balancing and de-bottlenecking, the capacity for production of hot-rolled steel will reach 3.6 Mtpy by 2005-06.
(v) JVSL is installing a new Blast Furnace and has planned to expand its hotmetal capacity from the existing 1.6 Mtpy to 2.5 Mtpy by 2004-05 and further to 4.0 Mtpy by 2005-06 at an investment of Rs. 2,500 crore
(vi) Essar Steel Ltd is setting up a 1 Mtpy capacity Blast Furnace to expand its existing capacity to 3.4 Mtpy by 2005-06. SMS Demag AG of Germany will provide the expertise in the expansion and modernization.
(vii) Jindal Steel & Power Ltd. (JSPL) will expand the steelmaking capacity from 1.15 Mtpy to 2.15 Mtpy at an investment of Rs. 1,200 crore. The company is also expanding its DRI production capacity from the existing 6.5 lakh tonnes per year to 1.31 lakh tonnes per year and will increase its power generation capacity from 205 MW to 255 MW.
(viii) Bhushan Steel & Strips will expand the production of its Khopoli Plant by 0.5 Mtpy for production of CRCA Coils and Sheets GP/GC sheets and coils, precision tubes and CDW tubes for application in the automotive industry.
(ix) Jindal Stainless is expanding its capacity to 0.5 Mtpy by 2004-05 at an investment of Rs. 350 crore to manufacturer value added cupro nickel coins for use in mints.
(x) Tinplate Company of India (TICL) will expand its capacity from 90,000 tpy to 125,000 tpy at an investment of Rs. 46 crore. The company will also invest Rs. 110 crore for the installation of a new tinning line.

Orissa attracts green field steel projects
     In addition to the Tata Steel projects at Duburi in Orissa mentioned above, many new greenfield projects are to be setup in the state. Some of which are mentioned below :
(a) BHP Billiton Australia in collaboration with Posco of South Korea will set up a 10 Mtpy plant at Duburi at an investment of Rs. 39,000 crore. Which will include the cost of power plants also.
(b) SPS sponge Iron Ltd will install a Rs. 400 crore sponge iron / steelmaking plant in Jharsguda in Orissa. The first phase costing about Rs. 62 crore is likely to go on stream soon. The company intends to set up a 2.2 lakh tonne sponge iron plant and then add a 2.6 lakh tonne capacity billet caster for making steel in the second phase. In the third phase, SPS will install a Blast Furnace as to produce 200,000 tpy of cold pig and a rolling mill to produce one lakh tonnes of finished steel per year and a 20 MW captive power plant
(c) Sunflag Iron & Steel Co will set up a 1 Mtpy plant at Sambalpur district at an investment of Rs. 937 crore. The first phase may be commissioned in 2007.
(d) Orissa Sponge Iron Ltd has proposed to invest Rs. 1,037 crore in two phase for its plants at Gurla and Govindpur in Sambalpur district. The first phase of the project is likely to commission in 2007.
(e) Bhushan Steel and Strips Ltd has planned to install a 1.2 Mtpy capacity hot strip plant at Lapanga in Jharsguda district at a cost of Rs. 1,650 crore in the first phase. A further investment of Rs. 1,850 in the second phase will take the capacity to 2.8 Mtpy by 2006-07.
(f) Jindal Stainless is setting up a 0.8 Mtpy capacity by 2009. The company 2006-07 and may add a further 0.8 Mtpy capacity by 2009. The company is likely to invest Rs. 1,146 crore in 2004-05. According to media reports some Rs. 50,000 crore worth of investments are proposed to be made in steel in Orissa. If all plans work right, Orissa could be India’s steel capital in future.

Conclusion
     The Indian steel industry has made marginal additions to its capacities in the decade up to 2003-04. The new greenfield projects and the massive expansions announced by leading producers may take the country’s production capacity to a level by 2011-12 that will help the consumption level to 60 Mtpy as envisaged in the National Steel Policy. Removal of infrastructure bottlenecks in railway and road transportation, speedy upgradation of ports and supply of uninterrupted power with consistent frequency will help the steel industry grow at a rapid space. The government should take a pragmatic view of the problems faced by the steel industry and take proactive steps in consultation with the Indian Steel Alliance so that it may become a major global player by 2011-12.