Tuesday, December 28, 2010

Major Initiatives and Achievements of Ministry of Steel in the year 2010

Year End Review 2010

Steel Sector - Key trends and achievements
The Steel sector has been showing steady and robust performance in the recent years.

· India became the 4th largest producer of crude steel in the world in 2010 as against the 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world by 2015. India also maintained its lead position as the world’s largest producer of direct reduced iron (DRI) or sponge iron.

· Capacity for crude steel production expanded from 51.17 million tonnes per annum (mtpa) in 2005-06 to 72.96 mtpa in 2009-10. Crude steel production grew at 8.4% annually from 46.46 million tonnes in 2005-06 to 64.88 million tonnes in 2009-10.

· In the next five years, demand of steel is likely to grow at a higher annual average growth of over 10% as compared to the average annual growth of 8% achieved between 1991-92 and 2009-10. In order to meet the growing demand 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes by 2019-20. Major investment plans are in the states of Orissa, Jharkhand, Karnataka, Chhattisgarh and West Bengal. This is likely to result in an investment of Rs. 8, 70,640 crores by 2020.

· Production for sale of finished steel stood at 59.69 million tonnes during 2009-10 as against 46.57 million tonnes in 2005-06, an average annual growth of 6.5%.

· Consumption of finished steel has grown at a CAGR of 9.2 % during the last five years.

· Production for sale of finished steel during April-October 2010-11 stood at 35.595 million tonnes and was up by 4.4% over the corresponding period of the previous year.

Major initiatives and achievements

(i) Steel Authority of India Ltd. (SAIL) became a Maharatna company and Rashtriya Ispat Nigam Ltd. (RINL) became a Navratna company during 2010. This will enable these PSUs to expedite their investment decisions.

(ii) Mega Expansion Plans of SAIL, RINL & NMDC Ltd.

· The expansion plans would increase the capacity of SAIL from 12.84 million tonnes (in 2006-07) per annum crude steel production to 21.40 million tonnes in the first phase to be completed by 2012-13., at an estimated cost of around Rs.70,000 crore, which includes Rs. 10,000 crore for mine development.

· Rashtriya Ispat Nigam Limited (RINL) is at an advanced stage of commissioning it crude steel capacity expansion project from 2.9 million tonnes to 6.3 million tonnes per annum. The project is likely to be completed by 2010-11.

· NMDC has recently signed an MoU with the Government of Chhattisgarh for setting up a green field integrated steel plant of 3 million tonne per annum capacity in Nagarnar, Chhattisgarh with an estimated cost of around Rs. 15525 crore.

· NMDC is set to sign a MoU with Russia’s third largest steelmaker, Severstal, for a plant in Karnataka. The deal, entailing an initial investment of $ 1 billion from Severstal, would mark the biggest Russian investment kin the non-defence sector as also the first Russian investment kin the ssteel sector. NMDC is also planning to set up a 1.2 million tonnes per annum (mtpa) capacity pellet plant at Donimalai, Karanataka.

(iii)Disinvestment of Steel PSUs

· 8.38% of the total government equity in NMDC was offered for sale through FPO. The entire proceeds from the offer for sale totaling Rs. 9930.42 crore has been deposited in the government account on 29.03.2010.

· Disinvestment of Government of India’s shareholdings in MOIL is on course. The IPO has been reported to have been oversubscribed by more than 55 times in the initial three days of the offer. Similar disinvestments are proposed in respect of SAIL and RINL.

(iv) Merger/acquisitions/revival/restructuring/Joint ventures of the Steel PSUs

· Government had approved merger of Sponge Iron India Limited (SIIL) with NMDC. The merger process was completed during 2010.

· Merger of Maharashtra Elektrosmelt Limited (MEL) with SAIL is also at an advance stage.

· A draft Cabinet Note for revival of HSCL has been circulated for comments of the concerned Ministries/Departments before placing before the Cabinet

· A proposal for restructuring of the Government owned companies collectively called the Bird Group of Companies for ensuring their revival was approved by the Government and the restructuring process is on.

· In order to take care of its shipping needs SAIL has joined hands with Shipping Corporation of India (SCI) for a joint venture for import of coking coal. Joint Venture agreement was signed on 29.3.2010.

· SAIL and M/s. Rail India Technical and Economic Services (RITES) have entered into a Joint Venture agreement on 14.9.2010 for setting up of a wagon manufacturing facility in Kulti (Asansol), Bardhman District of West Bengal. The wagon manufacturing plant will have a production capacity of 1200 wagons per annum and rehabilitation capacity of 300 wagons per annum.

(v) Special Purpose Vehicle

· A Special Purpose Vehicle(SPV) called “ International Coal Ventures Ltd” comprising of SAIL, RINL, CIL, NTPC and NMDC has been set up for acquisition of coal mines in overseas territories, with an equity base of Rs. 3000 crores to be leveraged with around Rs. 7000 crore of debt. The SPV will function like a Navratna company with powers to clear proposals involving investment of upto Rs. 1500 crores. The company has already initiated efforts to acquire coal properties abroad with specific countries like Australia, Mozambique, Canada, Indonesia and USA.

(vi) Enhancing steel distribution network

· Public sector steel units are expanding their dealer and distributor networks to reach district centers and remote areas of the country. Presently SAIL has a total marketing network of 2851 dealers, 66 warehouses, 37 branch sales offices and 27 customer contact offices in 620 districts of the country. RINL has over 150 dealers. Private sector steel companies have also been asked to expand their distribution network to cover almost all the major districts of the country.

· Ministry of Steel has evolved a scheme for routing the allocation of iron and steel materials from main producers like SAIL, RINL and Tata Steel to SSI units and other Government Departments through the Small Scale Industries Corporations (SSICs) and the National Small Scale Corporation (NSIC) and provides handling charges of approximately Rs. 500-550 tonnes per tonne to the Corporations so that the Corporations supply the steel materials at the doorsteps of the SSI units.

(vii) Corporate Social Responsibility (CSR)

· CSR has been identified as an important parameter in the MoUs drawn up by all the PSUs with the Ministry. CSR activities focusing on environmental care, education, health care, cultural efflorescence and peripheral development, family welfare, social initiatives and other measures are underway in the PSUs.

· All profitable Steel PSUs have earmarked at least 2% of their distributable surplus for CSR activities.

· Total budget of around Rs. 294.crore has been allocated for carrying out CSR activities by the Steel Ministry PSUs during 2010-11.

(vii) Promoting R&D in Steel Sector

In order to encourage R&D activities in iron & steel sector, Ministry of Steel is providing financial assistance from Steel Development Fund (SDF) and Plan Fund.

· 64 research projects initiated by public and private undertakings, research laboratories, educational and other promotional institutions have so far been approved at a cost of Rs. 442 crore during 2010, of which the SDF component is Rs. 278 crore. So far 31 projects have been completed and 24 research projects are underway.

· Rs. 118 crore was allocated from Plan Fund during the 11th five year plan for promotion of R & D in steel sector. Under this scheme 8 R& D projects have been approved with Plan fund of Rs. 111 crore.

(viii) Assessment of steel demand

· The Ministry has initiated a study to assess the steel demand in the rural areas of the country and to examine the potential of increasing the level of steel consumption. The study would cover 300 districts, 1500 villages, 4500 manufactures and 8000 retailers spread over all the 35 states and union territories of the country.

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