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Vishakhapatnam Steel Plant on the path of growth

Despite slowdown in the Indian steel sector, the production of finished steel, apparent consumption and exports continued to grow, During the current year, VSP is poised to achieve above 100 per cent target fulfilment, says Dr D. B. Singh CMD, RINL in his interview to Steelworld.

What has been the performance of RINL for the last 2 years, especially in the depressed market like one we are witnessing ?

For almost three years, from 1996 to 1999, there was a downswing in both the domestic and the overseas steel markets. Unstable domestic market with trade barriers made the Indian steel industry vulnerable to overseas trends. The Indian steel industry suffered due to rapid increase in import of cheaper seconds, defectives and waste products of steel.
However, in December 1999, with the strengthening of international prices, the domestic steel industry started looking up. But the upswing was short-lived and from May 2000 onwards, all gains of higher international prices started disappearing. Under these conditions, it became imperative for the domestic steel industry to concentrate within the country for improving its profitability.
Despite the slowdown in the Indian steel sector, the production of finished steel continued to show an upward trend. During 1999-2000, Finished steel production stood at 26.7 million tonnes, registering a growth of 12.1%. Apparent consumption of steel at 25.02 million tonnes, grew by 6.2% over 1998-99. While imports of steel stood at 1.8 million tonnes, exports were in the order of 3 million tonnes. During the first half of the current year i.e April to September 2000, the finished steel production has increased to 14.24 Mt, registering a growth of 11% over the same period last year. The exports during this period grew by 16% and the apparent consumption went up by 8.4% compared to the corresponding period last year.
Notwithstanding the growth in volume, prices are still under pressure due to excess capacity and low demand. In the above scenerio, the overall performance of VSP has been improving during the past few years. Substantial growth rates were registered in all areas during 1999-00 and the growth trends are continuing in the current year also. VSP registered several records in both production and techno-economic performances. These growth trends are continuing in the current year as well.
During 1999-2000, impressive growth rates were registered in production and created many records during the year, with the production of 2.94 Mt of hot metal, 2.66 Mt of liquid steel and 2.38 Mt of saleable Steel.
The annualised rate of liquid steel during the IV quarter of 1999-2000 was 3 Mt, which corresponds to the rated capacity. The annualised rate of saleable steel at 2.84 Mt during the same period has exceeded the rated capacity by 7%. During 1999-2000, 2.65 lakh tonnes of value added Steel Products were produced, representing a growth of 52% over the previous year.
During the current year, VSP is poised to achieve above 100% target fulfillment levels in all the areas. It is expected that the hot metal, liquid steel and saleable steel will be in the order of 3.12 Mt, 2.80 Mt and 2.40 Mt respectively. The finished steel production is expected to be as high as 16% over last year. Production of value added items during this year may grow by 8%. Till November ’00, almost all the production shops have created monthly records continuously.
During 1999-2000, techno-economic performance showed improvements in almost all areas. VSP registered the best annual performance in average converter lining life, average number of heats per sequence in continuous casting, Specific energy consumption, Specific refractory consumption, Labour productivity etc. The trend is coninuing this year also with steel melt shops setting up a new national record of 75 heats/day and 60.4 heats/day of monthly average. The labour producitivity of 232 tons/manyear achieved during November 2000 is the best among the Integrated steel plants in the country and also is the best for VSP since inception. It is expected that the techno-economics during the current year in respect of many parameters are going to be the best since inception.
On the Marketing front, due to depressed International Markets, the thrust has been on the Domestic Markets, while maintaining a certain level of Exports. The domestic sales for the period of three years i.e 1996-97 to 1998-99 were almost at the same level of around Rs 2500 crs. During 1999-2000, there has been substantial growth of over 8% in the domestic sales, while the exports remained at almost at the level of the previous year. This trend of growth in the domestic sales is continuing in the current year as well and the company is expected to post its highest turnover during this year.
With better financial management and through implementation of cost reduction measures, there has been a substantial improvement in the company’s financials. This year the company started clocking the cashprofit month after month, and it is our endeavour to see the clock moves in forward direction only throughout the year. On the whole, RINL is taking firm steps to consoldate its performance in the coming years.

How do you see the present situation and what are the likely trends in the future ?
Unlike in the past two years, the world apparent steel consumption is expected to grow by 3% to 719 Mt in 2000. The present trends give an indication that the recovery of the steel sector has started. Asia is going to witness substantial growth in apparent steel consumption during the current year.
In the domestic market, in the immediate future, the conditions of recession are likely to continue. However, there will be an increase in the production and apparent steel consumption. The current trends show that apparent steel consumption during 2000-01 will be in the order of 26.7 Mt, a rise of about 1 Mt over the previous year. As the domestic availability is more, it exerts pressure for larger exports.

In the next 2/3 years around half of the world steel demand is supposed to be coming from Asia. This is due to the infrastructutal development activities going on all over the region. How does RINL plan to tap this demand?
India’s Share in the total crude steel production of Asia is 8.2%, though its share in the export and import trade is presently minimal with 4.2% and 2.7% respectively. Many countries in Asia are net importers of steel. With its favourable cost competitiveness compared to Japan, European countries and China, India can play a very important role in export trade of steel to meet the requirements of other Asian countries.
The current production of saleable steel from VSP, RINL is in the order of 2.4 Mt per annum. With current level of domestic demand it will not be difficult for RINL to push the majority of its production in the domestic market. With increased opportunities for exporting its products to other Asian countries, RINL will also be able to increase its exports.

What initiatives do you expect from associations/government agencies to make the steel sector more vibrant ?
Showing due concern, the Government has initiated steps for formulating a new steel policy which include a road map for the Indian Steel Industry. It is expected that the Steel Policy will take into consideration all aspects of steel production like demand and supply, quality of imported raw materials, trade barriers in confirmation with the World Trade Organisation etc. The new steel policy is expected to improve the competitiveness of the Indian steel Industry in the international markets and also suggest ways to increase the domestic consumption.
The priority issues to be addressed by the Government are development of infrastructure sector, reduction of excise duty, controlling imports of re-rollable scrap and also ways to curb dumping of steel products Tell something about RINL.

What are its immediate targets as well as long term goals ?
The long term strategies of RINL are to achieve and stabilise the net profits through expansion, Cost reduction and profit maximisation. For the last three years, continuous efforts have been put in to improve the physical and fiscal performance of the company. The thrust is on :
Improving production through process intensification for achieving full potential of the plant
Reducing costs through improvement in productivity, automation / computerisation, energy conservation and waste management
Up-rating capacities of certain units by introducing state-Of - the-art technologies
Improving revenue generation, optimising net sales realisations, improving marketing effectiveness
Maximising profits by broadening the product mix
Reducing interest burden through appropriate strategies
VSP is on the path of growth. The production performance during the current year has instilled tremendous confidence in the RINL collective. several national and annual records in many areas were made during the year. This trend of continuous improvement coupled with confidence and morale of workforce augurs well for the company to have a bright future.

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