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ESSAR STEEL

History

The Essar Group was founded in 1969 by brothers Shri Shashi


Ruia and Shri Ravi Ruia.

The Essar Group began its operations with the construction of an


outer breakwater in Chennai port. It quickly moved to capitalise
on every emerging business opportunity, becoming Indias first
private company to buy a tanker in 1976.

In the 1990s, Essar began its steelmaking business by setting up


Indias first sponge iron plant in Hazira, a coastal town in the
western Indian state of Gujarat. The Group went on to build a
pellet plant in Visakhapatnam and eventually a fully integrated
steel plant in Hazira.

The Construction business helped the Group build most of its


business assets. Essar also entered the GSM telephony business,
establishing Indias first mobile phone service in Delhi (branded
Essar Cell phone) with Swiss PTT as the joint venture partner.

ESSAR STEEL Company


Essar Global Limited is a diversified business corporation with a
balanced portfolio of assets in the manufacturing and services
sectors of Steel, Energy, Power, Communications, Shipping Ports
& Logistics, and Construction. Essar Global employs over 40,000
people across offices in Asia, Africa, Europe and the Americas.
With a firm foothold in India, Essar Global has been focusing on
global expansion with projects/investments in Canada, USA,
Africa, the Middle East, the Caribbean and South East Asia.
Privately owned and professionally managed, Essar is judiciously
invested in the commodity, annuity and services businesses.
Forward and backward integration, state-of-the-art technologies,
in-house research and innovation have made Essar Global a
leading player in each of its businesses. Essars abiding
philosophy is to be a low cost, high quality, technology driven
group with innovative customer offerings.

Salient Features of the


company
Essar Steel is India's largest exporter of flat steel products
Essar Steel is the largest steel manufacturer on the West
Coast of India
Essar Steel has the first Indian steel plant to receive ISO
14001 award for environment management and ISO 9002 for
the entire plant operations

Vision And Mission of the


company.
Vision
We will be a respected global entrepreneur, through the power of
Positive Action.

Mission
We are committed to innovative growth, through our personal
passion, reinforced by a professional mindset, creating value for
all those we touch.

Beyond business Essars Policy


The Essar Group is both a people-driven and people-centric
organization. It understands the value that people deliver in the
making of a great company. The Groups spirited involvement in
community service is inspired by these beliefs. The Groups ethos
on social responsibility focuses on not just taking care of its own
employees but enabling and enriching the communities around
the areas where its plants are located. In addition, the Group has
been at the forefront in rendering aid and assistance by way of
donations as well as relief supplies in times of national calamities,
such as the Tsunami, earthquakes and floods.

Human Resource Polices of the


Company
At the Essar Group, we believe that excellent individuals build
excellent companies. And by transforming each employee into a
highly motivated, satisfied and productive team member, we will
create an outstanding organization. We also understand that each
individual has unique talents and expectations from the
organization. Based on those principles, human resources
development at Essar is customised, flexible and well planned.
Every Essar employee is meticulously selected and given the
freedom to be innovative, within a work culture that is non-
bureaucratic and result-oriented. We work with employees to
develop personalized and flexible individual plans for career
growth, retention and compensation within a carefully structured
work framework. Through extensive career mapping, we offer a
choice of career paths that could include job rotations across
functions and Group Companies. Essar's wide range of businesses
and exciting pace of growth presents a range of opportunities and
exposure that only a few others can match. The Group has a very
serious commitment to continuous training and development. Our
Essar Learning Centre provides year-round training. Thus, a career
with Essar will offer you a unique opportunity to unlock your own
potential and realize excellence.

Employees Motivation
The underlying objectives of Essars activities is to motivate
employees to participate in and contribute to the activities
initiated by the Community Relations Centre, to create self-help
groups for village women, to further overall development of
children and women, and to spread awareness about AIDS and
de-addiction.

Essars key focus areas


Essar has outlined seven focus areas where employee
involvement can make a difference to the lives of the community:

Education
Self-employment
Training
Infrastructure development
Medical
Health & hygiene
Recreation and welfare

Essars policy for the People


who related with the company
People, our most valuable assets

At Essar, we understand that excellent people deserve excellent


people practices. That's why we design our human resource
initiatives such that they unlock the full potential of every
employee.

Recruitments
We welcome talented college graduates. We are a preferred
employer at India's top engineering and business schools because
we offer competitive compensation, diverse opportunities in
terms of business and roles, fast growth and quick assumption of
large responsibilities. For the same reasons, we are able to attract
the best and the brightest talent at all levels.

Campus Programs
The Essar group has a strong emphasis on hiring at the entry
level, to create a pool of talented employees who are developed
and groomed to grow with the group. At the entry level, the group
hires mainly through two types of programmes:

Management trainee programmes


Graduate trainee programmes
Business leadership programmes

Management trainee
programmes
Through the management trainee programmes, Essar hires post
graduate management students from top ranking business
schools throughout India. Trainees are initially hired as a group
resource for a range of functions such as marketing, finance,
human resources and operations. Essar makes selections between
December and February, through a rigorous selection process.
Selected candidates then go through a comprehensive one-month
induction programme, which includes classroom sessions, an
introduction to all the group companies, plants and corporate
functions, and a six-day executive leadership camp at the Essar
Learning Centre. Soon after the induction, in an interview with
corporate human resources each trainee has the opportunity to
discuss mutual expectations, a career map and the group
company and assignment that he or she will be posted to.
Trainees are confirmed after completing the one-year
management trainee programmes. Depending on their
capabilities, management trainees can usually look forward to a
faster career track, an expanded role and eventually, a leadership
position within the organization.

Graduate trainee programmes


The Essar group prides itself on using global-scale, world-class
technology in all its companies. To maintain our technical edge,
the group hires engineer trainees annually between August and
January. Essar hires graduate engineer trainees (GETs) from the
IITs and the top-ranking regional engineering colleges across the
country and diploma engineer trainees (DETs) from the best
polytechnics in Gujarat, Andhra Pradesh and Tamil Nadu and other
regions of the countries to source the best talent available. These
trainees are hired for specific group companies. After they are
selected, they go through an induction programmes at the
company, which includes classroom sessions and plant visits.
Soon afterwards, each trainee has an interview with the Essar
Learning Centre head, to discuss his or her immediate placement
and future growth prospects. Trainees are confirmed after a one-
year training programmes for GETs and a two-year programmes
for DETs. Depending on their capabilities, both GETs and DETs can
look forward to increasing their technological expertise, a growing
technical specialization and key senior operational and technical
roles within the company.

Building careers
Essar has a high emphasis on performance, and we link both
career growth and rewards directly to merit and achievement. We
customize career paths and retention plans according to the
unique needs of an individual. Right from the entry level, we draw
career maps for each employee, outlining possible alternate
career paths, which could include planned job rotations between
functions or even group companies.

Solid performances, solid


rewards
Employees with a proven track record of high performance and
potential are identified annually through a fast-track programmed
evaluated by a top management panel. These achievers are
rewarded with top-of-the-market compensation, retention bonuses
and relevant training inputs.

Training and Development


Essar has a very serious commitment to continuous training and
development. Our world-class Essar Learning Centre provides
year-round training. We provide numerous resources for self-
assessment and development. Thus, a career with the Essar
group offers a unique opportunity to unlock your own potential
and realize excellence.

Continuous opportunities for development and growth - thats the


firm commitment that Essar makes to every single employee. The
Essar group is one of Indias largest spenders on continuous
training, investing about Rs. 1.4 crore (US$ 3 m) annually. Essar
Learning Centre (ELC) at Hazira, Gujarat has emerged as one of
Indias foremost training facilities, training 2,000-odd people a
year through 7,000 man days of training.

Being a dedicated facility, the ELC allows us to design tailor-made


and flexible programmes, so that training at Essar is always
relevant and customized both to business needs and the needs of
the individual. Our programmes cover a wide range of technical,
functional and behavioral training, from materials management to
e-commerce procurement to transformational leadership and
communication and negotiation skills. Our faculty includes the
best of experts and practicing managers. Since we believe in
imparting managerial & behavioral training, we also include a
number of non-business modules like corporate etiquette or
parenting skills. The ELC also has extensive resources for self-
development such as a business library of books and audiovisual
material. Thus, we support and encourage all Essar employees to
develop themselves to the fullest.

Executives Leadership Camp


(ELC)
The Executive Leadership Camp (ELC) is a six-day residential
programmes held at the Essar Learning Centre at Hazira, Gujarat.
This comprehensive programmes transforms junior management
employees into effective business executives.

Features of the camp


Participants in this holistic programme begin their day with yoga.
Throughout the camp, they learn more about Essar's key values
and culture through modules like quality & customer orientation,
Essar leadership values, organizational & behavioral etiquette, a
value meet and a plant visit. They learn how to become part of
the organization team through modules like self-awareness and
interpersonal relationship, conflict management, group dynamics
and team building, leadership & leadership styles & followership.
The programme also builds their personal management skills by
teaching useful skills like assertive skills, time management and
presentation skills. A fun outbound module allows them to
reinforce and use skills like teamwork or strategic thinking
through specially designed outdoor games and activities such as
a treasure hunt or rappelling.

Management Development
Programme (MDP)
The Management Development Programme (MDP) is a six-day
residential programmes that aims to prepare middle management
executives for newer roles in a changing environment. The MDP
helps make middle managers active and effective participants in
organizational processes like planning, implementation and
decision-making.

Features of the Camp


After beginning their day with yoga, participants learn how to
contribute to organizational growth and excellence through
modules like Essar leadership values, quality (kaizen), customer
satisfaction, striving for excellence, cost reduction and continuous
improvement. They learn how to be effective managers with
modules like the role of a manger in the present scenario,
performance management, goal setting, team building, people
development, conflict management and counseling skills. The
programmes enhances their personal management skills by
teaching segments like self-awareness, leadership, assertive
skills, motivation, integrity/personal values, negotiation skills and
corporate etiquette. A fun two-day outbound module allows them
to reinforce and use skills like teamwork or strategic thinking
through specially designed outdoor games and activities such as
a treasure hunt or rappelling.
Management Team
(Promoter Directors)

Shri. Shashi Ruia (Chairman) Shri. Ravi Ruia (Vice


Chairman)

Prashant Ruia (Director) Anshuman Ruia


(Director)
Smiti Kanodia (Director) Rewant Ruia
(Director)

Corporate Functions
Mr. S. V. Venkatesan(Resident Director Chennai)

Mr. J. Mehra (Resident Director - New Delhi)

Mr. Jayesh Buch(Resident Director Ahmedabad)

Mr. Madhu S. Vuppuluri (Resident Director - New York)

Mr. Suresh Sundaram(Director - Corporate Aviation)

Mr. Adil Malia(President - Human Resources)

Mr. Sunil Bajaj(President - Corporate Affairs)

Mr. Mukesh Bhavnani(President Legal)

Mr. Vijay Mehra (Chief Information Officer)

Mr. Sharad Goel(Group Head - Media Relations)

Mr. N. S. Paramasivam(Group Head - Forex & Treasury)

Mr. Dinyar M. Jivaasha (Group Head - Corp. Risk & Ins. Mgmt.)
SUGGESTION SCHEME FOR PARTNERS
IN GROWTH

Since inception, SRUJAN VIKAS, Suggestion Reward Scheme in


Visakhapatnam Steel Plant (VSP) has been playing a prominent
role to unleash the hidden talents of employees, resulting in huge
tangible and intangible benefits to the company.

Customers and Suppliers of VSP also play a major role in building


the strong image of VSP. Hence, it has been decided by VSP
management to capture the voice of customers and suppliers
through appropriate forum to improve customer and supplier
interface and serve them better. In these lines, a suggestion
scheme has been evolved and launched in VSP with a view to
encourage customers and suppliers to offer constructive
suggestions for improvement in different areas. The salient
features of the scheme are as follows:

1) Customers of RINL can give suggestions in prescribed


Customer Suggestion forms available at Customer Relations
Management Cell, all branch sales offices of Marketing and
Marketing Head Quarters.

2) Suppliers of RINL can also give suggestions in prescribed


Vendor Suggestion forms available at Vendor Development Cell of
Materials Management Department.

3) Acknowledgement letter after receiving suggestions will be


given by the concerned section / department to the suggestor.

4) A committee comprising of HOD of Marketing, HOD of MS


Department and member from Finance (not below the rank of E-5)
will evaluate the suggestions received from the customers.

5) A committee comprising of HOD of Materials Management


Dept., HOD of MS Dept. and member from Finance (not below the
rank of E-5) will evaluate the suggestions received from the
suppliers.

6) All accepted suggestions will be implemented by


respective departments.

7) Mementoes will be given to selected suggestors at Annual


Customers Meet / Vendors Meet / Appropriate forum.
Introduction
India was the worlds third-largest steel producer in 2016.@ The growth in the Indian steel sector
has been driven by domestic availability of raw materials such as iron ore and cost-effective
labour. Consequently, the steel sector has been a major contributor to Indias manufacturing
output.

The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for
continuous modernisation and up-gradation of older plants and higher energy efficiency levels.

Market Size
Indias crude steel production grew by 7.4 per cent year-on-year to 95.6 Million Tonnes (MT) in
2016.! Total production of crude steel during February 2017 grew by 8.5 per cent year-on-year to
8.08 MT.

Indias steel exports grew 150.0 per cent year-on-year to 0.75 MT in February 2017, while steel
imports declined 46 per cent year-on-year to 0.49 MT. Total consumption of finished steel grew
by 3.4 per cent year-on-year to 76.22 MT during April 2016-February 2017.

Investments
Steel industry and its associated mining and metallurgy sectors have seen a number of major
investments and developments in the recent past.

According to the data released by Department of Industrial Policy and Promotion (DIPP), the
Indian metallurgical industries attracted Foreign Direct Investments (FDI) to the tune of US$
10.15 billion, respectively, in the period April 2000 December 2016.

Some of the major investments in the Indian steel industry are as follows:

Tata Steel has signed an agreement to purchase a majority 51 per cent stake
in Creative Port Development (CPDPL), which has a concession agreement
with the Odisha government to develop a 10 million-tonnes-per-annum
(MTPA) Subarnarekha port at Chamukh village in Balasore district of Odisha.

Tidfore Heavy Equipment Group, the China-based infrastructure giant, is


looking to enter the Indian market by signing an investment agreement worth
US$ 150 million with Uttam Galva Metallics, to expand its Wardha unit along
with South Korean steel major Posco.

ArcelorMittal SA is looking to set up a joint venture (JV) factory in India with


state-owned Steel Authority of India Ltd (SAIL), to manufacture high-end steel
products which could be used in defence and satellite industries.

JSW Group plans to invest around Rs 10,000 crore (US$ 1.5 billion) at Salboni
in West Bengal to set up 1,320 Megawatt (MW) coal-based power plant, 4.8
million tonne cement plant and paints factory over a period of next five to
seven years.

National Mineral Development Corporation (NMDC) has planned to invest Rs


40,000 crore (US$ 6 billion) in the next eight years to achieve mining capacity
of 75 Million Tonnes Per Annum (MTPA) by FY2018-19 and 100 MTPA by
FY2021-22, compared to 48 MTPA current capacity.

Posco Korea, the multinational Korean steel company, has signed an


agreement with Shree Uttam Steel and Power (part of Uttam Galva Group) to
set up a steel plant at Satarda in Maharashtra.

ArcelorMittal, worlds leading steel maker, has agreed a joint venture with
Steel Authority of India Ltd (SAIL) to set up an automotive steel
manufacturing facility in India.

Iran has evinced interest in strengthening ties with India in the steel and
mines sector, said ambassador of the Islamic Republic of Iran, Mr Gholamreza
Ansari in his conversation with Minister of Steel and Mines, Mr Narendra Singh
Tomar.

Public sector mining giant NMDC Ltd will set up a greenfield 3-million tonne
per annum steel mill in Karnataka jointly with the state government at an
estimated investment of Rs 18,000 crore (US$ 2.7 billion).

JSW Steel has announced to add capacity to make its plant in Karnataka the
largest at 20 MT by 2022.

Government Initiatives
Some of the other recent government initiatives in this sector are as follows:

The Government of India has approved a joint venture (JV) between MSTC Ltd
and Mahindra Intertrade Ltd, for setting up India's first greenfield auto
shredding and recycling facility, which will aide in saving of foreign currency,
as a result of import substitution of scrap.

Mr Narendra Singh Tomar, Union Minister of Steel, Mines, Labour and


Employment, has launched the National Mineral Exploration Policy (NMEP),
which will help to adopt comprehensive exploration of non-fuel and non-coal
mineral resources that would give a major boost to the economy.

Metal Scrap Trade Corporation (MSTC) Limited and the Ministry of Steel have
jointly launched an e-platform called 'MSTC Metal Mandi' under the 'Digital
India' initiative, which will facilitate sale of finished and semi-finished steel
products.

The Parliament of India has cleared amendments to the Mines and Minerals
Development and Regulation (MMDR) Act, which will enable companies to
transfer captive mines leases similar to mines won through an auction, and
which is expected to lead to increased Mergers and Acquisitions (M&A) of
steel and cement companies.

The Ministry of Steel has announced to invest in modernisation and


expansion of steel plants of Steel Authority of India Limited (SAIL) and
Rashtriya Ispat Nigam Limited (RINL) in various states to enhance the crude
steel production capacity in the current phase from 12.8 MTPA to 21.4 MTPA
and from 3.0 MTPA to 6.3 MTPA respectively.

The Minister of Steel & Mines, Mr Narendra Singh Tomar, has reiterated
commitment of Central Government to support the steel industry to reach a
production target of 300 Million Tonne Per Annum (MTPA) in 2025.

The Ministry of Steel is facilitating setting up of an industry driven Steel


Research and Technology Mission of India (SRTMI) in association with the
public and private sector steel companies to spearhead research and
development activities in the iron and steel industry at an initial corpus of Rs
200 crore (US$ 30 million).

The Central Board of Excise and Customs (CBEC) has issued a notification
announcing zero export duty on iron ore pellets, which will help the domestic
industry to become more competitive in the international market.

Government has planned Special Purpose Vehicles (SPVs) with four iron ore
rich states i.e., Karnataka, Jharkhand, Orissa, and Chhattisgarh to set up
plants having capacity between 3 to 6 MTPA.

SAIL plans to invest US$ 23.8 billion for increasing its production to 50 MTPA
by 2025. SAIL is currently expanding its capacity from 13 MTPA to 23 MTPA, at
an investment of US$ 9.6 billion.

Road ahead
India is expected to become the world's second largest producer of crude steel in the next 10
years, moving up from the third position, as its capacity is projected to increase to about 300 MT
by 2025. Huge scope for growth is offered by Indias comparatively low per capita steel
consumption and the expected rise in consumption due to increased infrastructure construction
and the thriving automobile and railways sectors.
AN OVERVIEW OF STEEL SECTOR

Global Scenario

In 2016, the world crude steel production reached 1628 million tonnes (mt) and showed a
growth of 0.8% over 2015.

China remained worlds largest crude steel producer in 2016 (808 mt) followed by Japan
(105 mt), India (96 mt) and the USA (79 mt).

World Steel Association has projected Indian steel demand to grow by 5.4% in 2016 and
by 5.7% in 2017 while globally, steel demand has been projected to grow by 0.2% in
2016 and by 0.5% in 2017. Chinese steel use is projected to decline in both these years -
by 1% in 2016 and by 2% in 2017.

Per capita finished steel consumption in 2015 is placed at 208 kg for world and 489 kg
for China by World Steel Association.

Note: Data for the year 2016 is provisional (source: World Steel Association) and per capita
consumption data for 2016 is yet to be released

Domestic Scenario

The Indian steel industry has entered into a new development stage from 2007-08, riding
high on the resurgent economy and rising demand for steel.

Rapid rise in production has resulted in India becoming the 3 rd largest producer of crude
steel in 2015 and the country was the largest producer of sponge iron or DRI in the world
during the period 2003 to 2015 and was the 2 nd largest producer in 2016 (after Iran).

As per the report of the Working Group on Steel for the 12 th Five Year Plan, there exist
many factors which carry the potential of raising the per capita steel consumption in the
country. These include among others, an estimated infrastructure investment of nearly a
trillion dollars, a projected growth of manufacturing from current 8% to 11-12%, increase
in urban population to 600 million by 2030 from the current level of 400 million,
emergence of the rural market for steel currently consuming around 11 kg per annum
buoyed by projects like Bharat Nirman, Pradhan Mantri Gram Sadak Yojana, Rajiv
Gandhi Awaas Yojana among others.

At the time of its release, the National Steel Policy (NSP) 2005 had envisaged steel
production to reach 110 million tonnes (mt) by 2019-20.
The National Steel Policy 2017 has been formulated keeping in mind the rapid
developments in the domestic steel industry (both on the supply and demand sides) as
well as the stable growth of the Indian economy since the release of the NSP 2005. The
National Steel Policy 2017 is still in the draft stage.

Production

Steel industry was de-licensed and de-controlled in 1991 & 1992 respectively.

India is currently the 3 rd largest producer of crude steel in the world.

In 2015-16, production for sale of total finished steel (alloy + non alloy) was 90.98 mt, a
decline of 1.3% over 2014-15.

Production for sale of Pig Iron in 2015-16 was 9.23 mt, a decline of 4.8% over 2014-15.

India was the largest producer of sponge iron in the world during the period 2003-2015
and was the 2 nd largest producer in 2016 (after Iran) . The coal based route accounted
for 89% of total sponge iron production in the country in 2015-16.

Data on production for sale of pig iron, sponge iron and total finished steel
(alloy/stainless + non-alloy) are given below for last five years and April-Jan. 2016-17:

Indian steel industry : Production for Sale (in million tonnes)

Category 2011- 2012- 2013- 2014- 2015- April-Jan.


12 13 14 15 16 2016-17*

Pig Iron 5.37 6.87 7.95 9.69 9.23 7.85

Sponge Iron 19.63 14.33 18.20 20.38 14.53 12.39


Total Finished Steel 75.70 81.68 87.67 92.16 90.98 83.01
(alloy/stainless + non
alloy)

Source: Joint Plant Committee; *prov.

Demand - Availability Projection

Industry dynamics including demand availability of iron and steel in the country are
largely determined by market forces and gaps in demand-availability are met mostly
through imports.

Interface with consumers exists by way of a Steel Consumers Council, which is


conducted on regular basis.

Interface helps in redressing availability problems, complaints related to quality.

Steel Prices

Price regulation of iron & steel was abolished on 16.1.1992. Since then steel prices are
determined by the interplay of market forces.

Domestic steel prices are influenced by trends in raw material prices, demand supply
conditions in the market, international price trends among others.

An Inter-Ministerial Group (IMG) is functioning in the Ministry of Steel, under the


Chairmanship of Secretary (Steel) to monitor and coordinate major steel investments in
the country.

As a facilitator, the Government monitors the steel market conditions and adopts fiscal
and other policy measures based on its assessment. Currently, basic excise duty for steel
is set at 14% and there is no export duty on steel items. The government has also imposed
export duty of 30% on all forms of iron ore except low grade (below Fe 58%) iron ore
lump & fines and iron ore pellets both of which have nil export duty.

In view of rising imports, the Government had earlier raised import duty on most steel
items twice, each time by 2.5% and imposed a gamut of measures including anti-
dumping and safeguard duties on a host of applicable iron and steel items. In a further
move to curb steel imports, the Indian government banned the production and sale of
steel products that does not meet Bureau of Indian Standard (BIS) approval and to check
the sale of defective and sub-standard stainless steel products used for making utensils
and various kitchen appliances, it issued the Stainless Steel (Quality Control) Order, 2016
for products used in making utensils and kitchen appliances, that will help filter imports
of the metal. Again, in February 2016, the Indian Government had imposed the Minimum
Import Price (MIP) condition on 173 steel products. The MIP was extended thrice and
ceased to be effective in early February 2017. Further, a Steel Price Monitoring
Committee has been constituted by the Government with the aim to monitor price
rationalization, analyze price fluctuations and advise all concerned regarding any
irrational price behaviour of steel commodity.

Imports

Iron & steel are freely importable as per the extant policy.

Data on import of total finished steel (alloy/stainless + non alloy) is given below for last
five years and April-Jan. 2016-17:

Indian steel industry : Imports (in million tonnes)

Category 2011- 2012- 2013- 2014- 2015- April-Jan.


12 13 14 15 16 2016-17*

Total Finished Steel 9.32 11.71 6.10


(alloy/stainless + non alloy) 6.86 7.93 5.45

Source: Joint Plant Committee; *prov.

Exports

ron & steel are freely exportable.


Data on export of total finished steel (alloy/stainless + non alloy) is given below for last
five years and April-Jan. 2016-17:

Indian steel industry : Exports (in million tonnes)

Category 2011- 2012- 2013- 2014- 2015- April-Jan.


12 13 14 15 16 2016-17*

Total Finished Steel 5.59 4.08 5.87


(alloy/stainless + non alloy) 4.59 5.37 5.98

Source: Joint Plant Committee; *prov

Levies on Iron & Steel

SDF levy

This was a levy started for funding modernisation, expansion and development of steel
sector. The Fund, inter-alia, supports :

1. Capital expenditure for modernisation, rehabilitation, diversification, renewal &


replacement of Integrated Steel Plants.

2. Research & Development

3. Rebates to SSI Corporations

4. Expenditure on ERU of JPC

The SDF levy was abolished on 21.4.94

Cabinet decided that corpus could be recycled for loans to Main Producers
Interest on loans to Main Producers is set aside for promotion of R&D on steel etc.

An Empowered Committee has been set up to guide the R&D effort in this sector.

EGEAF Was a levy started for reimbursing the price differential cost of inputs used for
engineering exporters. Fund was discontinued on 19.2.96.

Opportunities for growth of Iron and Steel in Private Sector

The New Industrial Policy Regime

The New Industrial policy opened up the Indian iron and steel industry for private investment
by (a) removing it from the list of industries reserved for public sector and (b) exempting it from
compulsory licensing. Imports of foreign technology as well as foreign direct investment are now
freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of
a facilitator, providing broad directions and assistance to new and existing steel plants, in the
liberalized scenario.

The Growth Profile

(i) Steel : The liberalization of industrial policy and other initiatives taken by the Government
have given a definite impetus for entry, participation and growth of the private sector in the steel
industry. While the existing units are being modernized/expanded, a large number of new steel
plants have also come up in different parts of the country based on modern, cost effective, state
of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has
also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the
country.

Crude steel capacity was 121.97 mt in 2015-16, up by 11% over 2014-15 and India, which
emerged as the 3 rd largest producer of crude steel in the world in 2015 as per ranking released
by the World Steel Association, has to its credit, the capability to produce a variety of grades and
that too, of international quality standards. The country is expected to become the 2 nd largest
producer of crude steel in the world soon, provided all requirements for creation of fresh capacity
are adequately met.

(ii) Pig Iron: India is also an important producer of pig iron. Post-liberalization, 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 accounted for 92% of total
production for sale of pig iron in the country in 2015-16. The production for sale of pig iron has
increased from 1.6 mt in 1991-92 to 9.23 mt in 2015-16.

(iii) Sponge Iron: India is worlds 2 nd largest 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 and accounted for 89% of total sponge iron production in the
country. Capacity in sponge iron making too has increased over the years and stood at around 43
mt in 2015-16.
IRON AND STEEL INDUSTRY IN INDIA - PAST, PRESENT AND FUTURE

The history of steel-making in India can be traced back to 400 BC when the Greek emperors
used to recruit Indian archers for their army who used arrows tipped with steel. Many more
evidences are there of Indians perfect knowledge of steel-making long before the advent of
Christ. Archaeological finds in Mesopotamia and Egypt testify to the fact that use of iron and
steel was known to mankind for more than six thousand years and that some of the best products
were made in India. Among the widely-known relics is the Iron Pillar near Qutab Minar in Delhi.
The pillar, built between 350 and 380 AD, did not rust so far -----an engineering marvel that
baffles the scientists even today. Yet another engineering feat is the famous Sun Temple at
Konark in Orissa, built around 1200 AD, where steel structurals were used for the first time in
the world.

These were the halcyon days when India flourished in all directions and when its prosperity
was a matter of envy for the foreigners. But as ill luck would have it, Indias prosperity gave way
to poverty after the advent of the foreign rule. Indias indigenous industry languished because of
a deliberate policy of the colonial rulers to make the country only a supplier of raw materials.

Steel Role plays a vital role in the development of any modern economy. The per capita
consumption of steel is generally accepted as a yardstick to measure the level of socio-economic
development and living standards of the people. As such, no developing country can afford to
ignore the steel industry.

Beginnings

The first notable attempt to revive steel industry in India was made in 1874 when the Bengal
Iron Works (BIW) came into being at Kulti, near Asansol in West Bengal. However, forty-four
years before that, in 1830 to be precise, a foreigner, named Joshua Marshall Heath, had set up a
small plant at Porto Novo on Madras Coast. Heath produced in his plant pig iron at the rate of
forty tonnes a week. His method of iron-making needed approximately four tonnes of charcoal to
produce one tonne of low quality pig iron which proved to be too expensive for Heath to carry on
in the face of stiff competition from the British steel industry. The BIW made considerable
improvement in the process of iron and steel making. It used coke as the fuel instead of charcoal.
But the plant fell sick as the source of funds dried up. It was taken over by the Bengal
Government and was rechristened as Barakar Iron Works. In 1889 the Bengal Iron and Steel
Company acquired the plant and by the turn of the century the Kulti plant became a success
story. It produced 40,000 tonnes of pig iron in 1900 and continued to produce the metal until it
was taken over by Indian Iron and Steel Company (IISCO) in 1936.

For modern Indias iron and steel industry August 27, 1907 was a red-letter day when the Tata
Iron and Steel Company (TISCO) was formed as a Swadeshi venture to produce 120,000 tonnes
of pig iron. The TISCO plant at Sakchi (renamed Jamshedpur) in Bihar, started pig iron
production in December 1908 and rolled out its first steel the following year. TISCO had
expanded its production capacity to one million tonnes ingot by the time the country achieved
freedom. The Tatas, as Gandhiji said, represented the "spirit of adventure" and Jamsetji Tata, in
the words of Jawaharlal Nehru," laid the foundation of heavy industries in India". The British
rulers disfavoured this and other attempts to start indigenous industry. It was chiefly with the
help of American experts that the Tatas started their industry. Its childhood was precarious but
the war of 1914-18 gave it a fillip. Again it languished and was in danger of passing into the
hands of British debenture holders. But nationalist pressure saved it. In 1918, soon after the war,
Indian Iron and Steel Company (IISCO) was formed. The then Mysore government also decided
to start an iron works at Bhadravati. While IISCO started producing pig iron at Burnpur in 1922,
the Mysore Iron and Steel Works took about 18 years to start its plant. Meanwhile, the Bengal
Iron Works went into liquidation and merged with IISCO. The Steel Corporation of Bengal
(SCOB) formed in 1937, started making steel in its Asansol plant. Later in 1953, SCOB merged
with IISCO.

Prime Minister Nehru firmly believed that "no country can be jpolitically and economically
independent unless it is highly industrialised and has developed its resources to the utmost".
Nehrus ideas about Indias development were broadly incorporated in free Indias first Industrial
Policy Resolution adopted by the Contituent Assembly in 1948. The resolution officially
accepted the principle of mixed economy. Industries were divided into four categories. In the
first category were strategic industries which were made the monopoly of the Government. In the
second category were six industries which included, among others, coal, iron and steel.

It was decided that new units would be started exclusively by the government in the public
sector without disturbing the existing ones in the private sector. Eighteen industries, including
heavy castings and forings of iron and steel, ferro alloys and tool steel were covered by the third
category and the rest of the industries by the fourth. In sum, the government committed itself to
the development of basic steel industry while the private sector was to benefit through the
establishment of downstream units which would use pig iron, billets, blooms and flat products to
be made by the public sector steel plants.

In keeping with the spirit of the resolution the Government decided to start a chain of steel
plants all over the country in the public sector. The first such plant was set up at Rourkela in
Orissa. The second came up at Bhilai in Madhya Pradesh. It was followed by a third at Durgapur
in West Bengal. Each of these three plants had an initial production capacity of one million tonne
ingot. Durgapur was followed by a steel plant at Bokaro in Bihar. The onward march of Indian
steel did not stop at Bokaro. The fifth public sector steel plant was set up at Visakhapatnam in
andhra Pradesh. As a matter of fact, the country was dotted with steel and steel-related plants in
public and private sectors, like Alloy Steel Plant, Salem Steel Plant, Kalinga Iron Works,
Malavika Steel Ltd., Jindal Vijaynagar Steel Ltd., to name only a few. About the same time
TISCO launched its two-million-tonne expansion programme.

The Governments Industrial Policy had undergone changes ____ once in 1956 and then in
1991. The resolution modified in 1956 brought changes in the category pattern and listed more
industries for the public sector than did the earlier one, though it was not harsher towards the
private enterprise. In the new industrial policy announced in 1991 iron and steel industry, among
others, was included in the list of industries reserved for the public sector and exempted from the
provision of compulsory licensing. With effect from May 24, 1992 iron and steel industry was
included in the list of high priority industry for automatic approval for foreign equity upto 51%
(now 74%). Export-import regime for iron and steel has also undergone major liberalisation. The
freight equalisation scheme was withdrawn removing freight disadvantage to States located near
steel plants.

The new policy has already borne fruit. The finished steel pdroduction in India has gone up
from mere 1.1 million tonnes in 1951 to 23.37 million tonnes in 1997-98 despite overall
economic slow-down in the country.

It has been estimated that the demand for finished steel in 2001-02 would touch 38.68 million
tonnes and the projected availability of 38.01 tonnes is almost adequate to meet the domestic
demand along with export of six million tonnes. Similarly, by 2006-07, the final year of the tenth
plan, the demand for finished steel would be around 48.80 million tonnes, providing adequate
surplus for meeting the projected export potential of nine million tonnes.

However, there is hardly any scope for complacence over the fact that India continues to be
the 10th largest steel producer in the world. In 1997 Indias per capita steel consumption was only
22 kg which was much below the world average of about 126 kgs. Even if the domestic demand
grows up from 34.5 million tonnes to 100 million tonnes in 2025 the industry is unlikely to catch
up with the production in the developed countries.

The redeeming feature is the cost competitiveness of Indian steel in the global market.
According to World Steel Dynamics, the total cost of steel production in the USA is $510 per
metric tonne while in Japan it is $550, in Germany $557, in Canada $493 and in India it is $497.
This is because of high material cost due to high excise and import duties. Reduction of cost on
these accounts will make Indian steel more competitive in the world market. Indian steel can
reasonably expect a good market in the neighbouring countries now that the Asian economy is
looking up.

In conclusion, it can be said with a certain measure of confidence that Indias iron and steel
industry which had a glorious past and has an uncertain present may now look forward to a
bright future.