Policy, Initiatives and Achievements of the Ministry of Steel During the Last one Year
Policy, Initiatives and Achievements of the Ministry of Steel During the Last one Year
Ø During the year the Ministry played a crucial role in providing directives for the Steel industry¡¦s harmonious and integrated growth, facilitated removal of important constraints and was an active mediator for sensitive issues like pricing, iron ore exports and renewal of mining leases by the State Governments.
Ø It may be relevant to highlight certain facts about the industry which only confirms its importance for our economic growth. It¡¦s contribution to our GDP is nearly 2% and is also providing employment to over 5 lakh people. We are today the world¡¦s largest producer of sponge iron and the third largest producer of crude steel. With a targeted production capacity of 124 million tonnes, we may also expect to become the second largest steel producing nation. The sector continues to be one of the major contributors to the exchequer and last year, the consolidated net profits earned by all steel PSUs was over Rs. 8000 crores as on end December¡¦09.
Ø As everyone present here may be aware, the first policy initiative taken by the present Government was the announcement of the Agenda for 100 days. The Ministry¡¦s ¡§100 days¡¦ Agenda¡¨ was announced on 10th June 2009 and covered all important and strategic issues linked to the sector. I am happy to inform that action on almost all of the agenda items have been completed. Wherever it involved long term objectives and targets like the modernisation and expansion programmes of SAIL and RINL also the various projects are at advanced stages of execution.
Ø The priority issue for the sector has be en the need for creation of additional capacity for steel making specially in the light of the projected target of 124 million tonnes .An important result of this was the launching of ambitious expansion and modernisation programme for SAIL and RINL. Besides the above programme NMDC- the largest mining PSU under the ministry is also diversifying into steel making by setting up of a 3 million tonnes Integrated Steel Plant at Nagarnar, Chhattisgarh. Details relating to these initiatives have been given in the booklet circulated to all of you.
Ø After capacity creation, the next area of focus has been the need to ensure for raw material security specially for the Steel majors like SAIL. Two major achievements in this regard during the year was the resolution of the long pending issues linked to Chiria mines in Jharkhand and the Rowghat mines in Chattisgarh. After prolonged efforts the ¡¥In principle¡¦ approval was obtained for renewal of lease for Budhaburu mines, in the Chira-Gua belt in Jharkhand and also the forestry clearance for Rowghat mines in Chhattisgarh. SAIL has already initiated the setting up of a 7 MTPA mines in Budhaburu and a 12 MTPA state-of-the-art mine at Rowghat, Chhattisgarh.
Ø The Ministry is also responsible for smaller Steel PSUs like KIOCL, MSTC, HSCL and FSNL. Realizing the critical need for a review of their structure, functioning and objectives for efficient performance a Committee was constituted and its recommendations are under examination in consultation with the PSUs concerned.
Ø The year also saw promotion of joint ventures (JV) between PSUs for operational efficiency. Such agreements finalised includes the JV between MOIL and SAIL for setting up of a Ferro Alloy Plant at Nandini, Bhilai, Chhattisgarh, JV between MOIL and RINL for a Ferro Alloy Plant at Bobilli, Andhra Pradesh and agreement signed by SAIL with Shipping Corporation of India (SCI) for shipping of coking coal.
Ø The Ministry has been encouraging merger of PSUs and during the year administrative formalities relating to merger of erstwhile Bharat Refractories Ltd (BRL) with SAIL was completed. Action on two other merger proposals initiated are also at advanced stage of completion i.e. of Sponge Iron India Limited (SIIL) with NMDC and of Maharashtra Elektrosmelt Ltd (MEL) with SAIL.
Ø Restructuring of PSUs for improving their physical and financial performance continues to be an important agenda item of the Ministry. So during the year after obtaining the Cabinet approval existing shareholding pattern of the Bird Group of Companies (BGC) has been restructured to make in a PSU. The follow up action on converting the company into a subsidiary of RINL is being taken up. As for revival/restructuring of HSCL - a draft cabinet proposal is presently under formulation.
Ø The Ministry has been supportive of the stand that given their scale of operations, the larger PSUs do need greater autonomy in decision making. So during the year RINL - one of our most modern and integrated steel plants was made a Navaratna Company. SAIL has also been recently elevated to the status of Maharatna. However, SAIL would be able to exercise its delegated powers as a Maharatna Company subject to nomination of the requisite number of non-official Independent Directors in its Board.
Ø Two important performance turnaround achieved during the year was of MECON Ltd. - engineering and consultancy PSU becoming profitable after eliminating the accumulated losses since 2003-04 and the reopening of the Panna diamond mines in Madhya Pradesh lying closed since August, 2005.
Ø The 100 days agenda may have covered most of the strategic issues requiring the Ministry¡¦s intervention during the year but there were other significant achievements also. These included acquisition of Malavika Steel Ltd. at Jagdishpur, UP by SAIL, resuming of production by KIOCL Ltd. of their Pellet plant at Mangalore, MOU between SAIL and NMDC for development of Arki limestone mines at Solan, Himachal Pradesh, Joint Venture agreement between SAIL and Kerala Government for revival of steel complex at Calicut and MOU between SAIL with POSCO for possible joint ventures in use of FINEX technology.
Ø As the administrative Ministry for Steel we are also responsible for protection of steel consumer¡¦s interests in terms of availability, pricing etc. specially in the rural areas. A decision has been taken to appoint at least one dealer per district and today SAIL has 2508 dealers and RINL 90 dealers. Items of common consumption are also being made available through the rural dealer network at the same price as in Metros.
Ø The Ministry has been ensuring that a share of the profits generated by Companies are also flowed back to the society directly through their CSR activities for which all profitable Steel PSU¡¦s have earmarking at least 2% of their distributable surplus. Villages around their plants have been adopted by PSUs and being developed as ¡¥Model Villages¡¦ with facilities like roads, electricity, water, schools, community centers etc. More than 400 Health/Medical camps were organized by SAIL and other PSUs during the year covering over 5 lakh people in many states.
Ø To build of a world class steel industry with capacity to cater to diversified demand, continued investment in Research & Development is crucial. So during the year a new 11th Plan scheme for promotion of R&D in the Iron & Steel Sector was formally approved and initially four research projects have been cleared for implementation.
Ø As Steel PSUs are amongst the commercially viable and profit making companies they have been amongst those short listed for disinvestment by government. So 8.38% government equity in NMDC was disinvested and it resulting in generation of Rs. 9930.42 crore. Cabinet has also approved disinvesting 10% of shareholding in SAIL and for raising of 10% of additional equity by SAIL. Another similar proposal for MOIL is also under consideration.
Ø Today, Steel PSUs are amongst the best managed government companies and therefore have been receiving a number of awards, honours and accolades. During 2009-10 these honours won by them included PM¡¦s trophy for the best integrated steel Plant by RINL and Bhilai Steel Plant, the first Steel Minister¡¦s trophy for the best integrated Steel Plant by RINL, the maximum number of Shram and Vishwakarma Awards amongst both private and public sector by SAIL employees etc.
Ø Steel making is today a highly capital intensive and competitive industry and remains sensitive to global trends. In 2008-09 the sector was also affected by the global downturn and the resultant adverse market condition. But in 2009-10, the industry specially the Steel PSUs have been able to make a recovery. The resurgence in automotive appliances, capital goods and construction sectors have directly contributed to this positive performance. Therefore, 2010-11 has begun on a note of optimism and with the expectation that things may improve further specially for Steel PSUs