Sail Works on ‘Vision 2020’ to Achieve 60 Million Tonnes of Steel Production
Backgrounder
Steel Authority of India Ltd. (SAIL) is a Maharatna Public Sector Undertaking (PSU) under the Ministry of Steel and is one of the biggest steel manufacturers in the country. SAIL is in the process of implementing unprecedented modernisation & expansion programme to enhance its annual hot metal production capacity from present 13.8 million tonnes to about 24 million tonnes by the year 2012-13. For the first time, the company has undertaken modernization & expansion plan at this scale simultaneously at all the plants/units. The growth plan, besides targeting higher production, also addresses the need for eliminating technological obsolescence, achieving higher energy savings, enriching product-mix, reducing pollution, developing mines & collieries, introducing customer centric processes and developing matching infrastructure facilities. Orders for over Rs. 52,000 crores have already been placed under this modernisation & expansion plan.
SAIL has set the ball rolling for the company to work on Vision 2020 for the company. Keeping in line the estimated requirement of steel in the country and the potential SAIL has, action plan is underway for achieving 60 million tonnes production by 2020, which would be approximately 30% of the Indian Steel industry market share.
Towards this direction, SAIL has carried out an assessment of the ultimate potential of our plants at the existing locations. The cumulative production of steel at these locations would range 47- 48 million tones. The remaining 12-13 million tones would be in the form of greenfield investments in the new locations a part of which will be outside India. While stressing upon SAIL’s future plans, scaling up production of steel to such a high level will open a number of opportunities for business diversification. SAIL is contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimizing opportunities in related business areas.
To improve operational efficiency of steel units and to achieve synergy, a number of mergers / acquisitions / strategic alliances / Joint Ventures have taken place. Details of which are under:
Merger & Acquisition (M&A)s
Merger of Maharashtra Elecktosmelt Limited (MEL) with Steel Authority of India Limited (SAIL): Maharashtra Elektrosmelt Ltd (MEL), the 99.12% subsidiary of Maharatna Steel Authority of India Limited (SAIL), has been merged with SAIL. The process of merger of MEL with SAIL culminated with the receipt of the final order from the Ministry of Corporate Affairs in June last year. It has been renamed as “Chandrapur Ferro-Alloys Plant”.
Transfer of Salem Refractory Unit of Burn Standard Company Limited: The Salem Refractory Unit of Burn Standard Company Limited (BSCL) has been transferred to the newly formed subsidiary of SAIL, namely SAIL Refractory Company Limited (SRCL) in December last year. The process of transfer was initiated on 10th June, 2010, when the Cabinet Committee on Economic Affairs (CCEA) approved the financial restructuring of BSCL, and also authorized the Department of Heavy Industries and Ministry of Steel to work out operational steps for the transfer.
SAIL has formally acquired 50% of the shares of Steel Complex Limited (SCL) in Kozhikode held by the Government of Kerala (GoK) and taken over the operations of SCL. SAIL-SCL Limited, the joint venture company resulting from the acquisition, is working towards the revival of SCL. The JV is in line with the government’s policy of bringing together synergies of PSUs and strengthening them to be competitive in the market.
Strategic Alliances
In order to meet future challenges, SAIL is working on a long-term strategic plan 'Strategy 2020', "which will steer the company towards meeting its strategic objectives of achieving profitability through growth and customer satisfaction. Scaling up production of steel to such a high level will open a number of opportunities for business diversification. SAIL is therefore contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimizing opportunities in related business areas.
Besides, SAIL is making continual efforts for ensuring raw material security and forging alliances with global entities for tapping new markets. In this direction, SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of 'Preferred Bidder' for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore (with 62-64% Fe content). For facilitating acquisition of coking coal assets and companies in the mineral-rich countries, International Coal Ventures Private Limited (ICVL) is in the process of identification of coking coal assets and mines which could become a sustainable source of coking coal for the promoter companies.
New strategic initiatives have been taken to augment technological interventions, among which is the newly-launched R&D 'master plan' of SAIL aimed at facilitating "acquisition and development of appropriate technologies for sustainable growth". The other initiatives, related to SAIL's MoUs with global players such as Kobe Steel of Japan and POSCO of Korea are under progress.
Initiatives in this direction are mentioned below:
1. SAIL has signed term sheet for JV agreement with Kobe Steel Limited [KSL], a renowned Japanese Steel maker, for setting up a JV company for preparation of DPR for setting up a 0.5 MTPA ITmK3 technology [Iron Making Technology Mark Three] based plant at Durgapur for producing premium grade iron nuggets using iron ore fines and non-coking coal.
2. Sindri Project: Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 4th August, 2011 have approved the proposal for revival of the closed units of FCIL / HFCL with the stipulation that the BIFR proceedings be expedited and thereafter, the matter including changes, if any, required in bid parameters, be placed before the Committee for a final decision. As per the Cabinet approval, the consortium of SAIL and NFL has been nominated for revival of the Sindri Unit of FCIL. A new SPV company “SAIL-Sindri Projects Ltd” has already been incorporated on November 8, 2011.
3. The SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of 'Preferred Bidder' for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore (with 62-64% Fe content). The consortium will now have the opportunity to enter into a Hajigak Project Contract with the Ministry of Mines of the Islamic Republic of Afghanistan after formal negotiations, and to receive a license to further explore, develop and exploit the Hajigak iron ore deposits.
4. On 16th June’2011, SAIL signed MOU with M/s Mishra Dhatu Nigam Limited (MIDHANI) for exploring synergetic business opportunities in production of value-added products, enhanced research & development activities, exchange of technical know-how and joint investment between the two companies. A joint task force team (TFT) has been constituted to identify special steel products which can be jointly developed by utilizing the R&D facilities of both companies based on assessment of market demand and subject to techno-economic viability and commercial prudence.
5. On 23rd May 2011, SAIL and Burn Standard Co. Ltd. (BSCL), a PSU under the Ministry of Railways, entered into an MOU, for setting up a Wagon Components Manufacturing Facility (WCMF) as a 50:50 Joint Venture (JV) for the manufacture of Cast Steel Bogies, Couplers and related products for use on the Wagons running on Indian Railways. The project is planned to be set up on leasehold land under the possession of M/s Burn Standard Co. Ltd. (BSCL) at Jellingham, West Bengal. The Techno Economic Feasibility Report (TEFR) has been prepared by M/s RITES (Consultant).
6. On November 30, 2011, SAIL signed Term Sheet with Hindustan Prefab Limited (HPL), a PSU under the Ministry of Housing & Urban Poverty Alleviation, to engage in the business of prefab structures in steel and cement projects in India. Both the companies intend to produce Prefab steel products (PEB) and Prefab concrete products (hollow core slabs), subject to finalization of the location and layout of the project.
7. Expansion of Captive Power Plants of SAIL: SAIL is planning to expand the captive power generating capacity at BSP and RSP through its Joint Venture with NTPC by installing 2x250 MW Units and BSP and 1x250 MW unit at RSP. NSPCL is conducting feasibility studies for these power projects and has applied for various statutory clearances like Environment Clearance and allocation of coal and water.
8. Installation of Renewable Energy Based Power Plants : In line with policy framework provided by Electricity Act, 2003 and National Electricity Policy, Electricity regulatory Commissions of various states which mandates all users of captive power generation to either purchase / generate a specified minimum percentage of captive power generated from renewable energy sources (Solar, Bio Mass, Wind , Small Hydro etc). A long term strategy to meet renewable energy purchase Obligation has been worked out and options are being evaluated for installing Captive Power generation based on renewable energy sources.
Backgrounder
Steel Authority of India Ltd. (SAIL) is a Maharatna Public Sector Undertaking (PSU) under the Ministry of Steel and is one of the biggest steel manufacturers in the country. SAIL is in the process of implementing unprecedented modernisation & expansion programme to enhance its annual hot metal production capacity from present 13.8 million tonnes to about 24 million tonnes by the year 2012-13. For the first time, the company has undertaken modernization & expansion plan at this scale simultaneously at all the plants/units. The growth plan, besides targeting higher production, also addresses the need for eliminating technological obsolescence, achieving higher energy savings, enriching product-mix, reducing pollution, developing mines & collieries, introducing customer centric processes and developing matching infrastructure facilities. Orders for over Rs. 52,000 crores have already been placed under this modernisation & expansion plan.
SAIL has set the ball rolling for the company to work on Vision 2020 for the company. Keeping in line the estimated requirement of steel in the country and the potential SAIL has, action plan is underway for achieving 60 million tonnes production by 2020, which would be approximately 30% of the Indian Steel industry market share.
Towards this direction, SAIL has carried out an assessment of the ultimate potential of our plants at the existing locations. The cumulative production of steel at these locations would range 47- 48 million tones. The remaining 12-13 million tones would be in the form of greenfield investments in the new locations a part of which will be outside India. While stressing upon SAIL’s future plans, scaling up production of steel to such a high level will open a number of opportunities for business diversification. SAIL is contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimizing opportunities in related business areas.
To improve operational efficiency of steel units and to achieve synergy, a number of mergers / acquisitions / strategic alliances / Joint Ventures have taken place. Details of which are under:
Merger & Acquisition (M&A)s
Merger of Maharashtra Elecktosmelt Limited (MEL) with Steel Authority of India Limited (SAIL): Maharashtra Elektrosmelt Ltd (MEL), the 99.12% subsidiary of Maharatna Steel Authority of India Limited (SAIL), has been merged with SAIL. The process of merger of MEL with SAIL culminated with the receipt of the final order from the Ministry of Corporate Affairs in June last year. It has been renamed as “Chandrapur Ferro-Alloys Plant”.
Transfer of Salem Refractory Unit of Burn Standard Company Limited: The Salem Refractory Unit of Burn Standard Company Limited (BSCL) has been transferred to the newly formed subsidiary of SAIL, namely SAIL Refractory Company Limited (SRCL) in December last year. The process of transfer was initiated on 10th June, 2010, when the Cabinet Committee on Economic Affairs (CCEA) approved the financial restructuring of BSCL, and also authorized the Department of Heavy Industries and Ministry of Steel to work out operational steps for the transfer.
SAIL has formally acquired 50% of the shares of Steel Complex Limited (SCL) in Kozhikode held by the Government of Kerala (GoK) and taken over the operations of SCL. SAIL-SCL Limited, the joint venture company resulting from the acquisition, is working towards the revival of SCL. The JV is in line with the government’s policy of bringing together synergies of PSUs and strengthening them to be competitive in the market.
Strategic Alliances
In order to meet future challenges, SAIL is working on a long-term strategic plan 'Strategy 2020', "which will steer the company towards meeting its strategic objectives of achieving profitability through growth and customer satisfaction. Scaling up production of steel to such a high level will open a number of opportunities for business diversification. SAIL is therefore contemplating to diversify into areas where synergy exists or which are related to core strength of the company. This diversified portfolio will have an added advantage of de-risking the business from the fluctuations in steel business cycle, besides optimizing opportunities in related business areas.
Besides, SAIL is making continual efforts for ensuring raw material security and forging alliances with global entities for tapping new markets. In this direction, SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of 'Preferred Bidder' for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore (with 62-64% Fe content). For facilitating acquisition of coking coal assets and companies in the mineral-rich countries, International Coal Ventures Private Limited (ICVL) is in the process of identification of coking coal assets and mines which could become a sustainable source of coking coal for the promoter companies.
New strategic initiatives have been taken to augment technological interventions, among which is the newly-launched R&D 'master plan' of SAIL aimed at facilitating "acquisition and development of appropriate technologies for sustainable growth". The other initiatives, related to SAIL's MoUs with global players such as Kobe Steel of Japan and POSCO of Korea are under progress.
Initiatives in this direction are mentioned below:
1. SAIL has signed term sheet for JV agreement with Kobe Steel Limited [KSL], a renowned Japanese Steel maker, for setting up a JV company for preparation of DPR for setting up a 0.5 MTPA ITmK3 technology [Iron Making Technology Mark Three] based plant at Durgapur for producing premium grade iron nuggets using iron ore fines and non-coking coal.
2. Sindri Project: Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 4th August, 2011 have approved the proposal for revival of the closed units of FCIL / HFCL with the stipulation that the BIFR proceedings be expedited and thereafter, the matter including changes, if any, required in bid parameters, be placed before the Committee for a final decision. As per the Cabinet approval, the consortium of SAIL and NFL has been nominated for revival of the Sindri Unit of FCIL. A new SPV company “SAIL-Sindri Projects Ltd” has already been incorporated on November 8, 2011.
3. The SAIL-led consortium AFISCO (Afghan Iron & Steel Consortium), which had submitted its bid for mining exploration rights at Hajigak, has won the status of 'Preferred Bidder' for blocks B, C and D of the mines with an estimated reserve of 1.28 billion tonnes of high-grade magnetite iron ore (with 62-64% Fe content). The consortium will now have the opportunity to enter into a Hajigak Project Contract with the Ministry of Mines of the Islamic Republic of Afghanistan after formal negotiations, and to receive a license to further explore, develop and exploit the Hajigak iron ore deposits.
4. On 16th June’2011, SAIL signed MOU with M/s Mishra Dhatu Nigam Limited (MIDHANI) for exploring synergetic business opportunities in production of value-added products, enhanced research & development activities, exchange of technical know-how and joint investment between the two companies. A joint task force team (TFT) has been constituted to identify special steel products which can be jointly developed by utilizing the R&D facilities of both companies based on assessment of market demand and subject to techno-economic viability and commercial prudence.
5. On 23rd May 2011, SAIL and Burn Standard Co. Ltd. (BSCL), a PSU under the Ministry of Railways, entered into an MOU, for setting up a Wagon Components Manufacturing Facility (WCMF) as a 50:50 Joint Venture (JV) for the manufacture of Cast Steel Bogies, Couplers and related products for use on the Wagons running on Indian Railways. The project is planned to be set up on leasehold land under the possession of M/s Burn Standard Co. Ltd. (BSCL) at Jellingham, West Bengal. The Techno Economic Feasibility Report (TEFR) has been prepared by M/s RITES (Consultant).
6. On November 30, 2011, SAIL signed Term Sheet with Hindustan Prefab Limited (HPL), a PSU under the Ministry of Housing & Urban Poverty Alleviation, to engage in the business of prefab structures in steel and cement projects in India. Both the companies intend to produce Prefab steel products (PEB) and Prefab concrete products (hollow core slabs), subject to finalization of the location and layout of the project.
7. Expansion of Captive Power Plants of SAIL: SAIL is planning to expand the captive power generating capacity at BSP and RSP through its Joint Venture with NTPC by installing 2x250 MW Units and BSP and 1x250 MW unit at RSP. NSPCL is conducting feasibility studies for these power projects and has applied for various statutory clearances like Environment Clearance and allocation of coal and water.
8. Installation of Renewable Energy Based Power Plants : In line with policy framework provided by Electricity Act, 2003 and National Electricity Policy, Electricity regulatory Commissions of various states which mandates all users of captive power generation to either purchase / generate a specified minimum percentage of captive power generated from renewable energy sources (Solar, Bio Mass, Wind , Small Hydro etc). A long term strategy to meet renewable energy purchase Obligation has been worked out and options are being evaluated for installing Captive Power generation based on renewable energy sources.
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