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.
