STEEL AUTHORITY OF INDIA LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
To ,
The Members,
The Directors have pleasure in presenting the 38th Annual Report of the
company together with audited accounts for the year ended 31st March, 2010.
At the outset, it is heartening to note that with consistent good
performance, your company has achieved the rare distinction of becoming
Maharatna Public Sector Undertaking.
FINANCIAL REVIEW:
After witnessing a worldwide downturn in all spheres of business including
in the steel industry in second half of 2008-09, your company remained
focused on its fundamentals including expansion plans. It was the result of
concerted and collective action that during the calendar year 2009, SAIL
emerged as the second highest net profit earning company amongst all steel
companies of the world. In January, 2010, SAIL's overall ranking was second
in the list of 'World-Class Steelmaker Rankings' by World Steel Dynamics, a
leading steel information services provider.
Your company re-oriented its production in line with market demand,
substantially increased production of value added steel and achieved
saleable steel production of 12.6 Million Tonnes achieving 114% capacity
utilisation. Sales volume of saleable steel also improved by 7% at 12.1
Million Tonnes as against 11.3 Million Tonnes in 2008-09. The steel prices
which were at its low during October-December'08, started recovering
gradually from January 2009 onwards, but at a slow pace. However, the
average steel prices in 2009-10 were lower than those in 2008-09. Your
company achieved a turnover of Rs. 43,935 crore during 2009-10, which is
lower by 10% over previous year, mainly on account of lower selling price.
The profitability of your company improved by 8% during current year over
previous year, mainly due to higher saleable steel production & sales
volume; improved production of value added products; reduction in coke
rate, improvement in BF productivity & specific energy consumption,
favourable impact of input prices particularly of imported coal, nickel,
ferro-manganese, silico-manganese, aluminum etc; higher interest earnings
and impact of estimated provision for salaries & wages. However, the
profitability has been affected due to reduction in average net sales
realization of saleable steel, increase in royalty on minerals, higher
interest cost and depreciation. Several strategic actions were taken by the
management to improve profitability viz. increase in production and sales
of value added products, improved techno-economic parameters (coke rate,
blast furnaces productivity, specific energy consumption etc.),
optimization in procurement, continuous emphasis on cost reduction and
prudent fund management etc. The comparative performance of major financial
parameters is given as under:
Rs. in crore
2009-10 2008-09
Sales Turnover 43,934.70 48,738.11
Profit before interest, depreciation
and tax (EBIDTA) 11,871.28 10,946.06
Less: Interest and Finance Charges 402.01 259.41
Less: Depreciation 1337.24 1,287.77
Profit before tax (PBT) 10132.03 9398.88
Less: Provision for taxation 3,377.66 3,228.48
Profit after tax (PAT) 6,754.37 6,170.40
Net Worth 33317 28148
Key ratios : EBIDTA to Net sales (%) 29.3 25.3
Return (PAT) on Net worth (%) 20.3 21.9
EBIDTA to average capital employed (%) 31.1 34.7
Earning per share (Rs. 10/- each) 16.4 14.9
Debt Equity Ratio 0.50:1 0.27:1
The Company continued its thrust on optimum utilisation of funds by better
fund management. This included replacement of high cost short term loans
with low cost debts, strategic parking of surplus funds with scheduled
banks, actions for future fund raising etc. to meet our growth objectives.
The Company had liquid assets of Rs. 22,023 crore as on 31st March 2010
invested in short term deposits with scheduled banks. Considering
borrowings of Rs.16511 crore, the company maintained its virtual debt free
status. The debt equity ratio of the company increased to 0.50:1 as on 31st
March, 2010 from 0.27:1 as on 31st March, 2009, mainly on account of
increase in borrowings for capital expenditure. The net worth of company
improved substantially. Higher cash profits helped in higher generation of
internal resources for funding expansion plans.
The Company has paid interim dividend @ 16% of the paid-up equity share
capital during the year. The Board of Directors has further recommended a
final dividend @ 17% subject to approval of shareholders, thus making the
total dividend @ 33% of the paid up equity share capital for the year 2009-
10. A sum of Rs. 680 crore has been transferred to the general reserves
during the year (previous year Rs. 625 crore).
The Annual Report of SAIL was adjudged by South Asian Federation of
Accountants (SAFA) as the Best Presented Accounts under Public Sector
entities and was awarded 2nd Runner up (Joint) position for the year 2007-
2008.
Credit Rating:
M/s FITCH and M/s CARE, RBI approved credit rating agencies, maintained
'AAA' ratings, indicating the highest safety, to SAIL's long term borrowing
programme. Standard and Poor's, an International Rating Agency, has
assigned initial Issuer Rating of 'BBB-' with stable outlook to the company
in line with the sovereign rating.
PRODUCTION REVIEW:
The steel market in India showed great resilience, improving every quarter.
In line with market requirement the production was ramped up in SAIL and
two blast furnaces, which were taken for shutdown for repairs last year,
were started. As a result, the production in the current year was higher
than the production in the previous year, despite the fact that the year
2009-10 started with uncertainty due to market slowdown in the previous
year.
Your Company recorded higher volume of saleable steel production at 12.6
million tonnes, registering a growth of 1% over corresponding period of
last year (CPLY), with capacity utilisation of 114% during the year.
Production of hot metal at 14.5 million tonnes and crude steel at 13.5
million tonnes was also at 105% of rated capacity each. SAIL plants
achieved highest ever continuous cast production of 9.1 million tonnes - a
growth of 3% over last year.
The product-mix was further improved during the year with highest ever
special quality & value added products at 4.63 million tonnes - a growth of
24% over previous year. In 2009-10, your Company achieved the highest ever
production of Plates in BQ/SAILMA/IS-2062/ASTM etc. grades at 401,000
tonnes, recording a growth of 47%, highest ever production of special
quality semis at Durgapur steel plant at 886,000 tonnes and highest ever
Long Rail production of about 1.20 lakh tonnes, a growth of 13% over CPLY.
Your company is now producing almost 100% of TMT in special earthquake
resistant (EQR) grade to make quality steel available for the
infrastructure segment.
Several products were developed during the year viz. Creep Resistant plates
for use in the construction of shell plates of Blast Furnaces, Boiler
Quality thicker gauge plates for use in high capacity boilers, High Tensile
plates with improved corrosion resistance for manufacture of railway
coaches, 'Z' quality DMR 249 A plates for defence sector at BSP; Micro
alloyed wheel & axle for railways at DSP; Quenching & Tempering plates for
Gun carriage, API X 65 ERW pipes at RSP & High strength formable quality
steel & thin gauge high strength HR Coils for chassis manufacturing & pre-
fabricators, auto, cylinders application (EN 10120 P 265/P310 Nb) at BSL.
SAIL plants improved operational efficiency in major techno-economic
parameters by achieving best ever coke rate at 517 Kg/thm; highest ever BF
productivity of 1.57 T/m3/day; highest ever converter lining life at 11,036
blows in converter at Bhilai steel plant; best ever Coal Dust Injection
(CDI) rate; highest ever power generation at 568 MW and the best ever
Specific energy consumption at 6.72 Gcal/tcs during 2009-10.
Raw Materials:
Slow down in the global steel industry during 2009-10 also witnessed
general decline in raw materials prices. In order to reduce adverse impact
of costly imported coking coal on cost of production, your company has
taken measures for reduction of imported coking coal in the overall coal
blend. The company has fulfilled the requirement of iron ore from its
captive mines for its steel plants by producing about 23.44 million tonnes
during 2009-10. The production of fluxes from captive mines was 2.31
million tonnes. During 2009-10, continued thrust on production in SAIL's
captive collieries resulted in record annual production of over 1.36
million tonnes, registering a growth of 34%. After obtaining all statutory
clearances, small scale production from Tasra coking coal mine has been
started in November, 2009. Action for engagement of Mine Developer cum
Operator (MDO) for Tasra and Sitanala coking coal mines is in progress.
The iron ore requirement is estimated to go up to about 43 million tonnes
after completion of modernization and expansion plan of SAIL. For
continuation of mining operation, stage-I forestry clearance/ temporary
forestry clearance has been obtained for Gua, Barsua, Kiriburu &
Meghahatuburu iron ore mines. The matter for grant of forestry clearances
is also being actively pursued with the respective state governments of
Jharkhand and Orissa for other mines. State Government of Jharkhand has
accorded 'in-principle' approval for renewal of Budhaburu lease of Chiria
iron ore mine. However, delay in renewal of balance leases of Chiria & Gua
and delay in grant of Prospecting License for Thakurani mines are affecting
the security of enhanced requirement of iron ore for steel plants. As a
mid-course correction, steps have been initiated for expansion of capacity
of existing mines with beneficiation facilities. Lease for Rowghat 'F'
deposit has been granted and action for development of state-of-the art
mine of 14 mtpa ROM capacity is in progress as an alternative source of
iron ore to Bhilai Steel Plant (BSP). The land acquisition and construction
of rail link between Dalli-Rajhara and Rowghat are also under progress.
'S&T Mining Company Pvt. Ltd.' a joint venture company of SAIL & Tata Steel
Limited, is exploring various opportunities for acquisition and development
of coal mines and setting up coal washeries. Your company is also making
attempts for allocation of new coking coal as well as thermal coal blocks
to it for captive mining to enhance indigenous coal availability.
SALES & MARKETING REVIEW:
Your company has recorded domestic sales of 11.78 million tonnes during
FY'09-10 registering over 6% growth over previous year. Exports at 0.33
million tonnes also grew by 31% over FY'08-09. Sales of value added steel
grew to 4.5 million tonnes and constituted 37% of total domestic sales.
Major categories recording growth over previous year were: Wire Rods-13.9%;
Plates-10.5%; Hot Rolled Coils-10.2%; Medium Structurals-17.6%; Heavy
Structurals-35.8%. During the year supply of Long Rails (130m/260m) to
Indian Railways were increased by 13.7% over previous year. Supply of 26
meter Long Rails also registered a growth of 8.1% over previous best
achieved in FY'08-09. New records were also set in supplies of Loco wheels
and Loose Axles to Indian Railways during the year.
During the year 2009-10, your company added two Warehouses and two Customer
Contact Offices to its distribution network. With this, SAIL's marketing
network has expanded to 37 Branch Sales Offices (BSOs), 26 Customer Contact
Offices (CCOs) and 67 Warehouses. Your company also expanded its dealer
network in 2009-10 by appointing 700 dealers during the year. As on 1st
April, 2010 SAIL has a wide network of 2508 dealers spread over 630
districts of the country. Sales to dealers at 6.04 lakh tonnes in FY'09-10
registered a growth of 17.3% over previous year.
The company strengthened its presence in neighbouring and traditional
markets and exported 3.27 lakh tonnes steel during the year. The main
products exported were Billets, Plates, HR Coils, GC Sheets and
Structurals. New markets to which exports were undertaken during the year
were Ethiopia and Gulf countries. Export of Structurals was started from
ISP. Exports of Plates were resumed to South America after a gap of almost
5 years. Initiatives were put in place to reduce congestion related
problems at Nepal border for exports. Export of Loco Wheels was also
undertaken after a long gap.
Improvements in logistics were also undertaken during FY'09-10 for better
customer service and 1.33 million tonnes steel items were transported and
delivered at customers' premises by SAIL. This was an improvement of 25%
over FY'08-09.
PROSPECTS:
Indications for global recovery have gained strength with IMF projecting
growth in World Output at 4.6% and 4.3% for 2010 and 2011 respectively. The
rebound in world trade volume is expected to be even stronger at 9% after a
negative growth of 11% in 2009. IMF is also optimistic about performance of
Indian economy and has revised its projection of 8.8% for 2010, forecast in
April, 2010 to 9.4% in the July, 2010 update.
After a dip in growth in 2008-09, Indian economy is showing signs of
recovery with inflation being the only cause of concern. Robust industrial
growth in the initial months of fiscal 2010-11 has raised hope of a strong
recovery for the Indian economy for 2010-11. Economic Advisory Council to
the Prime Minister has projected a growth of 8.5% for 2010-11, which is
expected to touch 9% in 2011-12. The buoyancy in growth is expected to be
on account of manufacturing sector growing at double digit, and recovery in
agriculture projected to grow at more than 4%. Services are expected to
maintain their trend rate of growth at 9% and above. The general economic
environment in India hence augurs well for rebounding of steel consumption
growth upwards. WSA has projected a growth of more than 13% per annum for
India during 2010 and 2011, with the overall consumption reaching 72
million tonnes by 2011.
GROWTH PLAN:
Considering the fast growing demand for steel in the country, the Company
is currently implementing growth plan to enhance its Hot Metal capacity
from the level of 13.8 million tonnes in a phased manner. Under the ongoing
phase-I of modernization and expansion plan, hot metal production capacity
will get expanded to 23.46 million tonnes by 2012-13. The growth plan,
besides targeting higher production, also addresses the need for
eliminating technological obsolescence, achieving energy savings, enriching
product-mix, reducing pollution, developing mines and collieries,
introducing customer-centric processes and developing matching
infrastructure facilities.
To maintain its current dominance in the domestic market and to meet the
future challenges, SAIL is working on a long term strategic plan 'Lakshya
2020', which will steer the company towards meeting its strategic
objectives of achieving profitability through growth and customer
satisfaction.
MODERNISATION & EXPANSION PROJECTS:
SAIL's modernisation & expansion plan comprises capital projects relating
to 'Expansion', 'Value Addition/Product-mix improvement', 'Technological
Upgradation/ Modernisation of existing assets' and 'Sustenance including
Debottlenecking, Additions, Modifications, Replacements & Environment'
related projects.
The modernization & expansion plan includes installation of new Coke Oven
Batteries, new Sinter Plants, new Blast Furnaces of bigger capacity with
upgradation of existing blast furnaces, new Steel Melting Shops/ addition
of Converter in old shop, installation of new Mills etc. which will
increase share of finished steel in saleable steel. Along with the addition
of new facilities, most of the existing facilities are also being upgraded
to enable production of value added steels, reduce energy consumption and
for improvement in productivity, etc.
The expansion plan is being implemented simultaneously in all the Plants
including mines and requires matrix planning, involvement/ coordination
with a large number of agencies, prudent fund management, selection of
right technology etc. SAIL has already initiated actions in all these areas
to prepare the organization accordingly.
SAIL Board gave Rs.in-principle' approval during the year for New
Normalising Furnace, On-line eddy current testing machine and replacement
of gas holder at BSP; enhancement of production capacity at Gua Iron Ore
Mine along with beneficiation facilities & Installation of 4MTPA capacity
Pellet Plant and Installation of Tertiary Crusher at Meghahatuburu Iron Ore
Mine at RMD; Development of Sitanala Coal block at ISP and Revival of
Jagdishpur unit of SAIL with an estimated outlay of about Rs. 3350 crore.
Further, cumulative approval of about Rs. 45,000 crore has been accorded by
SAIL Board for modernization & expansion plan till date.
Hot Trials have started at Salem Steel Plant (SSP) in August, 2010 after
expansion. For ISP, BSP, DSP, RSP and BSL Expansion, execution of various
packages is in progress.
AMR SCHEMES:
A number of capital projects have been commissioned during the year and
several major projects valuing above Rs. 100 crore each are under
implementation at various Plants which include Rebuilding of Coke Oven
Battery No.6,700 tpd Air Separation Unit at BSP; 700 tpd Oxygen Plant and
Simultaneous Blowing at SMS-II at RSP; Coal Dust Injection in Blast
Furnaces-2 & 3, New Turbo Blower, Upgradation of Blast Furnace No.2,
Rebuilding of Coke Oven Batteries-1&2 at BSL, Rebuilding of Coke Oven
Battery No.10 at ISP and enhancement of loading capacity at Bolani Iron Ore
mines.
HUMAN RESOURCES MANAGEMENT REVIEW:
Human Resource is one of the greatest assets for the Company. SAIL has
believed in the ideology of achieving excellence through investing in
people and technology simultaneously. Company continues to work for the
development and realization of best potential of its people. To promote
motivational climate and achieve growth, thrust on optimal utilization of
manpower with focus on improvement in productivity continued. Efforts were
made for promoting better employee participation. Steps were taken to make
sure a smooth transition for upcoming production facilities and
preparations to work with a leaner workforce for enhanced productivity. HR
initiatives kept focus on building teams with wider spectrum with reference
to skill and knowledge.
During the fiscal 2009-10, all the five integrated steel plants recorded
their best ever labour productivity. An overall labour productivity of 226
Tonnes/man/year was achieved by SAIL, with Bhilai Steel Plant touching a
new peak at 340 T/man/year in Jan'10. Overall manpower figure at the year
end was 1,16,950 (after 1585 employees of BRL joined SAIL family as a part
of merger of BRL with SAIL) comprising 15,704 executives and 1,01,246 non-
executives; registering a net reduction of 5930, achieved by way of
judicious recruitments, redeployment strategies and multi-skilling.
Thrust continued on developing employees for a better role. Over 60
executives at GM/DGM level were nominated to participate in Specialized /
Advance management programmes, conducted by Premier Management Institutes
for exposure to best business practices and leadership development.
Overall, nearly 46,180 employees were trained during the year on different
contemporary technical and managerial modules; achieving level-1 of
Performance Evaluation Parameter under MOU with Government of India for the
financial year 2009-10.
Also, SAIL HR Excellence Awards initiated with IIM-Ahemdabad as the
knowledge and process partner with an objective to provide a platform to
share proven HR Practices / systems across the industry and thereby enrich
our knowledge in the field and spur new innovations.
Implementation of Presidential Directives on reservation for SC/STs:
Presidential Directives on Scheduled Castes and Scheduled Tribes continued
to be implemented. As on 31st March 2010, out of total manpower 15.39% were
SC and 12.76% were ST.
During the year 2009, out of total recruitment of 594 made by SAIL, 136
candidates belonged to SC category and 40 candidates belonged to ST
category. Besides, Company has undertaken several initiatives for the
socio-economic development of SCs/STs and other weaker sections of the
society, such as providing free education, boarding, loadging and medical
facilities to 128 SC/ST students belonging to BPL families/primitive
tribes, awarding 132 scholarships to encourage meritorious and deserving
SC/ST students and not charging tuition fee from SC/ST students studying in
the Company run schools.
GRIEVANCE REDRESSAL MECHANISM:
Effective internal grievances redressal machinery exists in SAIL plants and
units, separately for executives and non-executives. Grievances in SAIL
plants/units are dealt in 3 stages and employees are given an opportunity
at every stage to raise grievances relating to wage irregularities, working
conditions, transfers, leave, work assignments and welfare amenities etc.
The system is comprehensive, simple and flexible and has proved effective
in promoting harmonious relationship between employees and management.
IMPLEMENTATION OF RTI ACT, 2005:
Right to Information Act 2005 (RTI) empowers the common citizen by
providing access to information held by the Public authorities pertaining
to any period, in any form, including inspection of records. SAIL has
always endeavored to see that various enabling provisions of the Act are
implemented in letter and spirit.
During 2009-10, your Company has received nearly 3500 requests. Different
types of information as sought by the applicants have been given within the
set timelines. A number of workshops/ programs were organized for creating
mass awareness for promoting use of the Act in the right earnest. One half
-a- day program for general public and one day workshop for dealing
officers on RTI Act were organized at Corporate Office, Delhi.
AWARDS AND ACCOLADES:
Company's excellent performance got recognition from several quarters
during the year 2009-10. SAIL employees bagged the maximum number of Shram
and Vishwakarma awards, declared in the country in August, 2009, amongst
both private and public sector organizations. 63 employees of SAIL received
Vishwakarma Award 2007 - 52% of total workmen awarded in the country. 21 of
SAIL employees were conferred with the Shram Award 2007 - over 40% of the
total workmen awarded in India.
At the SCOPE & DPE function held in October, 2009, SAIL had the unique
distinction of bagging four awards from Hon'ble Prime Minister, which was
highest amongst all PSUs. This included SCOPE Gold Trophy for Excellence &
Outstanding Contribution to Public Sector Management in the 'Institutional'
category for the year 2006-07 and two MoU Excellence Awards in the
categories 'Mining & Metals' and 'Listed companies' for the year 2007-08.
Gold Trophy of 'SCOPE Meritorious Awards-2007-08 for Research &
Development, Technology Development & Innovation' was also bagged by SAIL.
SAIL has been the proud recipient of 'Best Presented Accounts Award' for
the year 2008' from South Asian Federation of Accountants.
Other major awards received by the company include 'India Pride Awards'
Excellence in PSU under the award category 'Metal, Mineral & Trade';
'National Centre for Promotion of Employment for Disabled People (NCPEDP)
Shell Hellen Keller Award 2009'; 'Indian Chamber of Commerce, PSU
Excellence Award'.
In addition, SAIL plants/Units have won recognitions as under:
* BSP has won the prestigious Prime Minister's Trophy for best integrated
steel plant in India for the years 2006-07 & 2007-08.
* BSP won 'Inssan Award' for the year 2007-08 in recognition of excellence
in implementation of Suggestion Scheme and 'National Energy Conservation
Award' for the year 2009 in recognition of efforts in energy conservation
in integrated steel plant.
* DSP received 'ISTD- Vivekanand National Award' for the year 2008-09 from
Indian Society for Training & Development, 'National Energy Conservation
(NEC) Award-2009' in the Integrated Steel Plant Sector from Ministry of
Power.
* BSL received 'Performance Excellence Award' for the year 2007-08 from
Indian Institute of Industrial Engineering, Mumbai in recognition of
Excellent Performance; 'Inssan Award' for the year 2008 from Indian
National Suggestion Scheme Association.
* SSP won 'Greentech Safety Award' - silver award under Metal sector for
the year 2007-08 from Green Tech Foundation, New Delhi in recognition for
Best Safety Performance on May'2009; 'CSR Award' for the year 2008 from
Govt. of Tamil Nadu in recognition for Best CSR activities.
* VISL got selected for 'International Quality Award' in the gold category
by Business Initiative Direction, at Madrid, Spain.
CITIZEN CHARTER:
SAIL's Citizen Charter has outlined commitment of SAIL towards its
stakeholders thereby empowering them to demand better products and
services. The Citizen's Charter of SAIL may be summarised in four
objectives, as given below:
* Ensuring citizen-centric focus across all its processes by adopting Total
Quality Management principles for improvement of products and services
* Ensuring effective citizen communication channels
* Demonstrating transparency and openness of its business operations by
hosting the Citizen's Charter on the corporate web site
* Working towards delight of citizens by fail-safe processes and in case of
exigencies leveraging its service recovery processes, like Grievance
Redressal, Handling Complaints etc.
The Management of SAIL is totally committed to excellence in public service
delivery through good governance by a laid down process of identifying
citizens, our commitment to them in meeting their expectations and our
communication to them of our key policies in order to make the service
delivery process more effective. The Citizen Charter is a dynamic
commitment which is reviewed continually to improve the effectiveness of
the document.
STRATEGIC INITIATIVES OF THE COMPANY:
During the year 2009-10, your Company Continued to give impetus towards
taking new business initiatives including incorporation / formation of new
JVs, mergers & acquisitions and entering into Memorandum of Understandings
(MoUs) for its long term strategic objectives. Your company is continuously
adopting the path of entering into Joint Ventures (JV) with public /
private parties to attain its strategic goals of maximizing gains with
optimal utilization of resources. These include:
Mergers & Acquisitions:
* Consequent upon Ministry of Corporate Affairs' Order dated 28th July,
2009, Bharat Refractories Ltd (BRL) has been amalgamated with SAIL w.e.f.
1.4.2007. The appointed date of amalgamation being 1st April, 2007, Company
has revised the accounts of SAIL for the financial year ended 31st March,
2008 and 31st March, 2009, which are enclosed for approval of the
shareholders. After amalgamation, erstwhile BRL, has become a unit of SAIL
and renamed as SAIL Refractory Unit (SRU). The revival of the unit is under
progress and its performance has improved after coming into the fold of
SAIL.
* Merger of Maharashtra Elektrosmelt Ltd. (MEL) with SAIL : After obtaining
'No Objection Certificate' (NOC) from Government of Maharashtra (GOM) for
transfer of land to SAIL, the process of the merger has since been
initiated, and the Scheme of Amalgamation submitted to Ministry of
Corporate Affairs and one hearing on the matter has already taken place. As
directed by Ministry of Corporate Affairs, the approval of the shareholders
is being obtained for the Scheme of Amalgamation.
* The process of acquisition of refractory unit of Burn Standard Company
Ltd.(BSCL), as a subsidiary company of SAIL is at its preliminary stage.
* After acquisition of the assets of erstwhile Malvika Steel, SAIL is in
the process of developing the Jagdishpur Steel unit in a phased manner,
starting with an annual production capacity of 1,50,000 tonnes of TMT Bars,
13,000 T of Crash Barriers Steel and 10,000 T Galvanised Corrugated Sheets.
Also, efforts are being made to set up a 475 MW Gas based power plant at
this location.
Joint Ventures:
* After entering into a Joint Venture Agreement with Shipping Corporation
of India (SCI) a joint venture shipping company has been incorporated in
May, 2010 for bulk transportation of SAIL's cargo initially for 1.2 million
tonnes per annum, which would further scale upto 4 million tonnes per
annum.
* MOU has been signed with NMDC Limited to jointly develop the limestone
mine at Arki located in Solan district of Himachal Pradesh with envisaged
production capacity of 3 million tonnes per annum. After development of the
Arki limestone mine, SAIL will have a captive source of limestone with the
advantage of assured supplies of this critical raw material of good quality
at reasonable price.
* Towards achieving the Government's decision of making PSUs self reliant
in the area of coking coal, International
Coal Ventures Private Limited (ICVL) has been set up as a Joint Venture
Company with SAIL, CIL, RINL, NMDC and NTPC as its promoter companies. ICVL
was incorporated on 20th May, 2009 and is actively scouting for coal assets
and coal companies in Australia, USA, Indonesia, South Africa and
Mozambique. Apart from above, following strategic initiatives are taken to
augment technological interventions on a long term basis: l MoU signed
with POSCO and a detailed feasibility study is being conducted to
explore a) Manufacture and commercialization of CRNO steel; and b)
Exploration of upstream and downstream opportunities in utilizing FINEX
technology. l MOU has been signed with M/s Kobe Steel Limited (KSL) for
exploring the technical and economic feasibility of ITmK3 technology for
producing premium grade iron in the form of nuggets. l Dialogue on
technology intervention in steel and related areas has been initiated with
Japan's Nippon Steel Corporation (NSC).
Enterprise Risk Management:
Enterprise Risk Management (ERM) policy has been framed for identification
of key risk areas and formulate appropriate risk mitigation plans for
taking corrective action in a time bound manner.
IT RELATED INITIATIVES:
SAIL is continuously moving ahead in innovative usage of Information
Technology (IT). Enterprise Resource Planning (ERP) is being implemented in
the company. ERP has gone live in BSP, DSP & BSL from 01/04/2009,
01/10/2009 & 01/04/2010 respectively. ERP implementation is in progress at
CMO & RSP with scheduled Go-live dates as 01/11/2010 & 01/04/2011
respectively. Manufacturing Execution System (MES) is being implemented at
BSP with scheduled commissioning in July 2011.
Keeping pace with the technological trend in field of IT communications,
SAIL has installed and commissioned MPLS -VPN based Wide Area Network on
fibre optics at its 30 locations across India. The plants and units are
connected to secure and reliable MPLS - VPN with bandwidth ranging from 512
Kbps to 8 Mbps. Various applications such as Primavera, Executive
Performance Management System (EPMS) and other applications developed for
SAIL. Video Conferencing system at all 33 locations in SAIL, now is being
conducted using the IP protocol through MPLS-VPN network with improved
performance, clarity & quality and for longer durations without any
interruption or breakdown.
Other IT initiatives include: Online Mediclaim system for retired employees
of SAIL to ease the process of renewing the policy every year.
ENVIRONMENT MANAGEMENT:
* SAIL reaffirms its commitment to contribute towards a clean sustainable
environment and continually enhancing its environmental performance as an
integral part of its business philosophy and values.
* As a responsible corporate citizen, SAIL is fully committed towards
Corporate Responsibility of Environment Protection (CREP) target. Plants
have taken lot of measures in the field of reducing fugitive emission,
specific water consumption, specific energy consumption and enhancing solid
waste utilisation. All these actions are continuous in nature so that SAIL
strives to go beyond the targets set, wherever possible. Modernisation and
Expansion plan of SAIL is taking care of (a) 100% production of steel
making through Basic Oxygen Furnace (BOF) route, (b) 100% processing of
steel through continuous casting, (c) auxiliary fuel injection system in
all Blast Furnaces, (d) energy saving schemes and (e) adherence to
environmental norms. In fact, one of the guiding principles of SAIL is to
make positive impact on the environment and promote good environmental
practices. Areas of improvement during 2009-10 over 2008-09 are :
* Air emission reduced to 1.55 kg/tcs, an improvement of more than 3%.
* Solid waste utilization increased to 80%, an improvement of more than 1%.
* Specific effluent discharge reduced to 2.53 m3/tfs, an improvement of
more than 1%.
* Energy consumption reduced to 6.72 Gcal/tcs, an improvement of 0.1%.
* More than 2.1 lakh saplings have been planted during 2009-10 at plants,
mines and townships with accumulative plantation of 175 lakh till date.
CORPORATE SOCIAL RESPONSIBILITY:
For any organization, CSR begins by being aware of the impact of its
business on society. The Credo of SAIL specifically highlights the
commitment towards society at large which states, inter-alia 'Making a
meaningful difference in people's life'. SAIL's Social Objective is
synonymous with Corporate Social Responsibility (CSR). Apart from the
business of manufacturing steel, the objective of the company is to conduct
business in ways that produce social, environmental and economic benefits
to the communities in which it operates.
To meet the above objective, specific Corporate Social Responsibility (CSR)
Groups have been formed at Corporate Level and at all plants/units in SAIL.
As a matter of policy, the Budget allocated for Corporate Social
Responsibility [CSR] is 2% of budgeted distributable surplus (after
Dividend and Dividend Tax).
SAIL has established 61 Primary Health Centres, 8 Reproductive and Child
Health Centres, 18 Hospitals and 6 Super-Specialty Hospitals for
specialized healthcare to almost 26.7 million people since inception. 138
schools have been set up in the steel townships for modern education to
about 74,000 children. Assistance has been provided to over 260 schools of
villages surrounding its units for free education of more than 55,000
tribal students. SAIL has achieved a Girl:Boy ratio of 1:1 for all levels
of education and a survival rate of 95.8% in SAIL Primary Schools and 90%
in SAIL Secondary Schools.
Since inception, SAIL has provided roads in 435 villages helping around 56
lakh people and has been undertaking their construction and repairs on a
regular basis. SAIL has also provided access to water infrastructure to
people living in far-flung areas by installing 4714 water sources, thereby
providing drinking water access to around 37 lakh people.
SAIL has been awarded Annual SCOPE Award-'SCOPE Meritorious Award for
Corporate Social Responsibility & Responsiveness for the year 2008-09' by
Hon'ble President of India. The Annual FICCI Awards 2008-09 in the category
of 'The Vision Corporate Triple Impact - Business Performance : Social &
Environmental Action and Globalisation Award : 2008-09' by the Hon'ble
Finance Minister of India, Shri Pranab Mukherjee. Bhilai Steel Plant (BSP)
-SAIL has been short listed for 'Golden Peacock Award for CSR- 2008-09'.
79 villages have been adopted for developing them as Model Steel Villages
across eight states. The developmental activities being undertaken in these
villages include medical & health services, education, roads &
connectivity, sanitation, community centers, livelihood generation, sports
facilities, etc. By March, 2010, 54 Model Steel villages have been
completed.
The Company is also working towards preserving culture and heritage. Some
of the key activities include assistance to maintenance of monuments in
Lodhi Garden, New Delhi.
CORPORATE COMMUNICATION:
To enhance the confidence of stakeholders in SAIL, the company's corporate
image was strengthened through various external and internal communication
initiatives. The year kicked off with the SAIL Award for Excellence in HR
practices in Manufacturing Industry which received full attention of the
Communications team of SAIL.
Focus on major sports events was the highlight of the year. With SAIL as
the Presenting Partner of World Cup Hockey held in India during Feb-Mar
'10, the company's brand visibility increased manifold with several
communication collaterals built around the event. In-stadia branding
resulted in SAIL getting eyeballs around the world, wherever World Cup
matches were telecast. In India alone, more than four crores viewers
watched the matches on television. The 'SAIL Man of Steel' award presented
at the end of every match reinforced SAIL's image as the leading steelmaker
of India while participation of school students as mascots carried the
company's values to budding citizens. SAIL also sponsored three wrestlers,
Mr. Yogeshwer Dutt, Mr. Sushil Kumar and Mr. Rajiv Tomar, for their
preparations for the forthcoming Commonwealth Games. Mr. Sushil Kumar
upheld the hopes of SAIL by bagging the Bronze Medal in the 66 kg Freestyle
wrestling competition at Beijing Olympics.
Other major initiatives taken during the year are:
* In order to give added boost to brand building exercise, SAIL sponsored
number of major events of national importance and image building exercises
for the organization were carried out through exhibitions, outdoor media &
release of advertisements to the Print Media.
* Introduction of Media Buying process of release of advertisements,
resulting in substantial recurring savings.
* Regular interactions with the media held articulating the future goals of
the company including expansion plans.
* Several publications kept stakeholders updated with happenings in the
company viz. SAIL News, Brochures, Folders, plant based newsletters, wall
papers, posters, etc.
VIGILANCE ACTIVITIES:
SAIL Vigilance has successfully implemented ISO 9001:2008 Quality
Management System. SAIL Vigilance has been focusing on preventive and
proactive activities to facilitate environment for enabling people to work
with integrity, efficiency and in a transparent manner. The following are
some of the major activities undertaken by SAIL Vigilance during the year:
* The Purchase / Contract Procedure of SAIL was reviewed based on feedback
obtained from different stake holders and the new Purchase & Contract
Procedure - 2009 (PCP-09) was issued in April 2009.
* On the initiative of SAIL Vigilance, Standard Bidding Document (SBD) was
reviewed for making it concise and bringing it in line with the present
requirement and CVC guidelines. The revised SBD has been implemented in May
2009.
* A training programme for enhancing commercial acumen of executives
working in the shops was designed in collaboration with Management Training
Institute, Ranchi and conducted twice during the year. Apart from this,
more than 135 workshops involving 3490 participants were organized by
Vigilance for enhancing awareness of Purchase/Contract procedures, RTI Act,
Conduct & Discipline Rules etc. Resource Persons were also developed for
conducting more such training / awareness programmes at Plants/Units.
* For effective implementation of the Integrity Pact, review meetings were
conducted periodically with the Independent External Monitors (IEMs). A
vendors meet was also organized in December 2009 to increase awareness
amongst the vendors regarding the provisions of the Integrity Pact.
* A total of 4004 periodic checks, including surprise checks and file
scrutiny, were conducted in the vulnerable areas / departments of different
Plants & Units. Further, 12 major system improvement projects were
undertaken by SAIL Vigilance over and above the system improvements
recommended on the basis of Vigilance investigations.
MANAGEMENT DISCUSSION & ANALYSIS REPORT:
The Management Discussion & Analysis Report covering the performance and
outlook of the Company is enclosed.
AUDITORS' REPORT:
The Statutory Auditors' Report on the Accounts of the Company for the
financial year ended 31st March, 2010 along with Management's replies
thereon is enclosed at Annexure-I. The Comptroller & Auditor General of
India (C&AG) vide its letter dated 3rd July, 2010 has given 'nil' comments
on the accounts of the company for the year ended 31st March, 2010, under
Section 619 (4) of the Companies Act, 1956. A copy of the above letter of
C&AG is enclosed at Annexure - II.
REPORT ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.:
Information in accordance with the provisions of Section 217(1)(e) of the
Companies Act, 1956 read with the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988 regarding Conservation of
Energy, Technology Absorption and Foreign Exchange Earnings and Outgo is
given at Annexure-III to this report.
PARTICULARS OF EMPLOYEES:
There was no employee of the Company who received remuneration in excess of
the limits prescribed under Section 217(2A) of the Companies Act, 1956 read
with the Companies (Particulars of Employees) Rules, 1975.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to Section 217(2AA) of the Companies Act, 1956, it is hereby
confirmed:
(i) that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
(ii) that the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company at the end of the financial year and of the profit of the Company
for that period;
(iii) that the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) that the directors had prepared the annual accounts on a going concern
basis.
CORPORATE GOVERNANCE:
In terms of listing agreement with the Stock Exchanges, a compliance report
on Corporate Governance is given at Annexure-IV. A certificate from
Auditors of the Company regarding compliance of conditions of Corporate
Governance is placed at Annexure-V. In terms of Listing Agreement, the
Board has laid down a Code of Conduct for all Board Members and Senior
Management of the Company. The Code of Conduct has been posted on the
website of the Company. All the Board Members and Senior Management
Personnel have affirmed compliance with the code.
CONSOLIDATED FINANCIAL STATEMENTS:
In terms of listing agreement with the Stock Exchanges, the duly audited
consolidated financial statements are placed at Annexure-VI.
SUBSIDIARY:
The Maharashtra Elektrosmelt Limited (MEL) recorded a turnover of Rs.
382.06 crore. The Net Profit after Tax (PAT) for the year was Rs. 47.90
crore after charging depreciation of Rs. 2.48 crore, interest/ finance
charges of Rs. 0.18 crore and tax of Rs. 31.33 crore. MEL produced 71062
tonnes of High Carbon Ferro Manganese and 42149 tonnes of Silico Manganese
during the year. Audited Accounts of Maharashtra Elektrosmelt Limited for
the year ended 31st March, 2010 are enclosed as Annexure-VII. IISCO-Ujjain
Pipe & Foundary Company Limited, a wholly owned subsidiary of the erstwhile
Indian Iron & Steel Company Limited (IISCO), was ordered to be wound up by
BIFR. The Official Liquidator is continuing its liquidation process. The
assets of the Company have been realized and the settlement of claims is in
process.
DIRECTORS:
Shri V. Shyamsundar, Managing Director, DSP ceased to be Director w.e.f.
31.10.2009 (A.N.) on attaining the age of superannuation.
Shri P.K. Bajaj has been appointed as Managing Director, DSP w.e.f.
1.11.2009.
Prof. Javaid Akhtar, Shri P.K. Sengupta and Dr. Vinayshil Gautam ceased to
be Directors w.e.f. 21.11.2009.
Shri G. Ojha, Director (Personnel) ceased to be Director w.e.f. 31.01.2010
(A.N.) on attaining the age of superannuation.
Prof. Deepak Nayyar and Shri A.K. Goswami have been appointed as Directors
w.e.f. 11.02.2010.
Shri R. Ramaraju, Managing Director, BSP ceased to be Director w.e.f.
31.03.2010 (A.N.) on attaining the age of superannuation.
Shri B.S. Meena, SS&FA, MOS has resigned from the Directorship of the
Company w.e.f. 31.03.2010.
Shri B.B. Singh has been appointed as Director (Personnel) w.e.f. 9.4.2010.
Shri S. Machendra Nathan, AS&FA, MOS has been appointed as Director w.e.f.
25.5.2010.
Shri S.K. Roongta ceased to be Chairman of the Company w.e.f. 31.5.2010
(A.N.) on attaining the age of superannuation.
Shri Soiles Bhattacharya, Director (Finance) held the additional charge of
Chairman, SAIL from 1.6.2010 to 10.6.2010.
Shri C.S. Verma has been appointed as Chairman w.e.f. 11.6.2010.
Shri S.P. Rao, Managing Director, ISP ceased to be Director w.e.f.
30.6.2010 (A.N.) on attaining the age of superannuation.
Shri V.K. Srivastava, Managing Director, BSL ceased to be Director w.e.f.
31.07.2010 (A.N.) on attaining the age of superannuation.
Shri S.S. Mohanty has been appointed as Managing Director, BSL w.e.f.
1.8.2010 (F.N.)
Dr. Jagdish Khattar and Prof. Subrata Chaudhuri have been appointed as
Director w.e.f. 21.08.2010 (F.N.)
ACKNOWLEDGEMENT:
The Board of Directors wish to place on record their appreciation for the
support and cooperation extended by every member of the SAIL family. The
Directors are thankful to the State Governments, Electricity Boards,
Railways, Banks, Suppliers, Customers and Shareholders for their continued
cooperation. The Directors also wish to acknowledge the continued support
and guidance received from the different wings of the Government of India,
particularly from the Ministry of Steel.
For and on behalf of the Board of Directors
(C.S. Verma)
Chairman
Place: New Delhi
Dated: 21.08.2010
Management Discussion and Analysis Report
The Management of Steel Authority of India Limited presents its Analysis
Report covering the performance and outlook of the Company.
A. INDUSTRY STRUCTURE & DEVELOPMENTS:
General Economic Environment:
World output growth for 2010 projected at 4.6%, signals a recovery compared
to recessionary trend in 2009 when the global output shrank by 0.6%. The
recovery is attributable to strong performance by the emerging economies,
recovery in the developed world, restocking of inventories and rebound in
global trade which had shrunk by 11.3% in 2009. During 2010 and 2011, the
world trade volume of goods and services is expected to increase by more
than 9% in 2010.
While the emerging and developing economies are performing strongly, in the
developed world recovery in US is better than Europe and Japan. The
advanced economies as a group are expected to grow at 2.6% in 2010 and 2.4%
in 2011 against a negative growth of 3.2% during 2009. Emerging and
developing nations registered a growth of 2.5% during 2009 which is
expected to increase to 6.8% and 6.4% respectively for 2010 & 2011.
The challenges for growth are in terms of a pressing need in the advanced
economies for medium term fiscal consolidation and a clear cut time frame
to bring down gross debt to GDP ratio. With a fiscal deficit hovering at 9%
of GDP for the advanced nations, based on current policies, the debt to GDP
ratios of these economies are expected to exceed 100% of GDP by 2014. There
is hence a need for withdrawal of Government stimulus for overall fiscal
consolidation. The pace of the withdrawal however, has to be managed in a
manner that it does not impair growth. The near term risk is in the form of
sovereign liquidity and solvency in Greece which could potentially become a
full blown contagious sovereign debt risk.
For the emerging economies, public debt ratio ranges between 30-40% of GDP
and is likely to fall given the high GDP growth. The challenge to the
emerging economies is mainly management of inflation.
Indian Economy:
The revised estimate for 2009-10, has projected a GDP growth of 7.4%
compared to 6.7% for the previous year. The impact of bad monsoon is
visible on performance of agriculture sector which has declined by 0.2%,
however, strong growth of 9.3% for industry and 8.5% for services have led
to the recovery of overall GDP.
The index of industrial production has grown at 10.4% for April to March
2009-10 compared to 2.8% in 2008-09. The growth of core infrastructure
industries during this period was 5.5% against a growth of 3% in the
previous year. Manufacturing sector with a growth of 10.8% and mining at
10.6% have been the growth contributors for industry. On the demand side,
capital goods and consumer durables have led the recovery at 19.2% and 26%
respectively.
Exports which registered a negative growth of 4.7% during 2009-10 started
showing a recovery in the later part of the year while the imports declined
by 8.2%. Inflation continues to be a worry with the point to point measure
for March 2010 at 9.9%.
There is however a degree of optimism regarding the performance of Indian
economy. IMF has projected a growth of 9.4% for 2010 and 8.4% for 2011.
Global Steel Industry:
The recovery in the global steel industry became evident from June 2009
when the crude steel production crossed 100 million tonnes after a gap of 8
months. The capacity utilization which had dropped from 86% in July 2008 to
58% in December 2008, recovered to 80% in February 2010. It has become
stagnant around this level for last 6 months.
World Steel Association (WSA) in its latest demand forecast has projected a
world wide steel consumption growth of 10.7% during 2010 and 5.3% in 2011.
This is a strong reversal from a negative growth of 1.6% in 2008 and 6.7%
decline in 2009. The emerging economies which remained positive in growth
through the crises will be driving the world growth. In the major developed
economies, growth will be slower with projected demand for 2011 below the
2007 level. Only Asia and Middle East showed increased production in first
six months of 2010 above the corresponding period in 2007.
The sharp recovery in global steel demand is attributable to Govt. stimulus
packages and inventory restocking. The risks to the growth are in terms of
fiscal balancing, dealing with inflationary pressure and increased raw
material price volatility for the steel sector.
China where consumption of finished steel reached 542 million tonnes in
2009 - a growth of 25% over the previous year - will see a lower
consumption growth in subsequent years. The projected finished steel
consumption for China during 2011 is 595 million tonnes.
The year 2011 is projected to take the global steel consumption to a new
peak of 1.3 billion tonnes.
Top 10 steel-producing countries (Crude Steel in mmt)
Rank Country 2009 2008 % change
2009/2008
1 China 567.8 500.3 13.5
2 Japan 87.5 118.7 -26.3
3 India 62.8 57.8 8.7
4 Russia 60 68.5 -12.4
5 US 58.2 91.4 -36.3
6 South Korea 48.6 53.6 -9.3
7 Germany 32.7 45.8 -28.6
8 Ukraine 29.9 37.3 -19.8
9 Brazil 26.5 33.7 -21.4
10 Turkey 25.3 26.8 -5.6
Short range outlook for apparent steel use, finished steel (2009-2011) by
WSA
Apparent Steel Use, Growth Rates,
mmt %
Regions 2009 2010 2011 2009 2010 2011
(e) (f) (f) (e) (f) (f)
European Union 118.4 134.6 145.2 -35.2% 13.7% 7.9%
(27)
Other Europe 23.9 27.2 30.4 -12.5% 13.5% 11.9%
C.I.S. 35.8 39.8 43 -28.2% 11.0% 8.0%
N.A.F.T.A. 80.9 99.9 107.1 -37.4% 23.5% 7.2%
Central & South 33.6 40.4 43.1 -24.1% 20.0% 6.7%
America
Africa 26.4 28.7 31.3 9.6% 8.6% 9.3%
Middle East 40.7 44.7 48.4 -8.0% 10.0% 8.2%
Asia & Oceania 761.5 825.7 857.7 8.7% 8.4% 3.9%
World 1,121.2 1,240.9 1,306.2 -6.7% 10.7% 5.3%
China 542.4 578.7 594.9 24.8% 6.7% 2.8%
BRIC 640.9 692 720.7 17.5% 8.0% 4.1%
MENA 57.5 62.9 68.2 0.8% 9.5% 8.4%
World excl. China 578.8 662.2 711.3 -24.5% 14.4% 7.4%
World excl. BRIC 480.3 548.9 585.6 -26.8% 14.3% 6.7%
(e) estimate ; (f) forecast
Indian Steel Sector:
The consumption of finished carbon steel in India in 2009-10 has been
estimated at 53 million tonnes - a growth of 7.8% over the previous year.
While the exports at 3.4 million tonnes declined by 13%, imports at 6.7
million tonnes grew by 14%. Overall saleable carbon steel production has
been estimated at 56.8 million tonnes for the year 2009-10.
WSA has projected a growth of more than 13% for India during 2010 and 2011,
with the overall consumption reaching 72 million tonnes by 2011.
B. OPPORTUNITIES & THREATS FOR SAIL:
Opportunities
* India is likely to emerge as the fastest growing steel market globally.
This will provide opportunities for steel companies to grow and acquire
scale of global giants. SAIL being the dominant producer of steel in India
is suitably poised to avail opportunities offered by the expanding market.
Threats:
* Global economic recovery is fragile. The developed economies are under
pressure for reconstructing their financial sectors and achieving fiscal
consolidation without impacting growth. Emerging economies, on the other
hand, have to contend with the threat of inflation. A slowdown in global
economic recovery will impact overall steel demand adversely.
* With significant excess capacity in the global steel industry during
2009-10. Cheap imports from China and CIS continue to pose threats for
domestic suppliers. With growth in developed countries somewhat shaky,
India could become the target for cheap steel exports.
* Delays in environmental clearances and renewal of mining leases could
lead to uncertainty with regard to raw material linkages and delay fresh
capacity becoming operational.
C. RISKS AND CONCERNS:
General economic slowdown is anticipated to be long drawn with slow
recovery. The recovery in steel sector may also take a longer time. Excess
capacity during this period will put pressure on the margins in the steel
business.
The process of clearance of mining leases in the country needs to be
streamlined. As development of mines takes place over a number of years,
delayed clearances may impact the overall economics of operations for the
company.
Steel making is a raw materials intensive process. Each tonne of finished
steel involves transportation of 4 tonnes of materials. Infrastructure cost
in India is higher than international benchmarks. To have internationally
competitive steel industry, it is essential that infrastructure cost comes
down in future.
SAIL has had the advantage of low operating cost but with the
implementation of the National Mineral Policy, which resulted in shifting
royalty rates of iron ore from the specific duty to ad valorem rates at 10%
of the sale price, the production cost has been impacted adversely. Other
infrastructure problems like availability of railway wagons, port
congestion etc. would also affect operations at SAIL Plants and will have
direct impact on operating margins.
Coking coal continues to be a critical input and SAIL needs to develop new
technologies to make the indigenous coal suitable for use in the steel
mills and thereby reduce the dependence on imported coking coal. Another
concern is Global warming. SAIL is adopting clean development mechanism
projects to reduce the impact of Global warming.
Inflation in India is hovering around double digit levels and is a cause
for concern. Tighter monetary policy and restrictive fiscal policy to
contain fiscal deficit, may impact the resurgence in domestic steel demand.
The Indian Rs. has strengthened against US dollar in recent times. Further
appreciation of Rs. will adversely impact price line for steel sector as
the domestic prices for steel are determined by the landed cost of imports.
India is dependent on imports for meeting its increasing requirement of
coking coal. With high level of market concentration, dominant suppliers of
sea borne coking coal regulate production to just match the demand and
maintain high price. As price of steel is cyclical, raw material suppliers
can extract high margin from steel producers, impacting returns on steel
business.
D. OUTLOOK:
The medium to long term outlook for steel in India is robust. India has
entered the steel intensive phase of economic development, with sustained
investment in infrastructure, construction, urban renewal and high activity
level in manufacturing. While there may be short term fluctuations in
response to domestic and global concerns, the medium to long term prospects
appear very bright.
During 2009-10, SAIL has taken various marketing initiatives and achieved
record annual sales at 12.4 million tonnes in FY'09-10, a growth of 8% over
FY'08-09. This was made possible with a number of initiatives taken to
service customers demands better. Some of the new initiatives taken during
FY '09-10 are given as under-l Significant growth achieved in sales of Auto
grade HRC, LPG grade HRC, ATM Grade Plates, SAILMA 550/550HI Grade Plates.
* Many new products were developed in 2009-10 such as 3mm Chequered Coils,
SAIL-MC60 HR Coils, C30 HMn 1.2 HR Coils, SAE 1541 HR Coils & API X60 ERW
Pipes at RSP, DMR 249B Plates at RSP & BSP, ATM Grade Plates at BSP.
* Production and sale of TMT re-bars stabilized in IS1786 Grade D. IS 1786
Grade D is considered to be a superior grade having better earth quake
resistant properties.
* It has been our continuous endeavour to improve customer satisfaction. As
a step in that direction, door deliveries to customers were increased to a
record level of 1.325 million tonnes registering 25% growth over CPLY.
* SAIL has the largest marketing network among all steel producers in the
country. During FY '09-10, marketing network was further expanded by
opening two more Warehouses and two new Customer Contact Offices. The
marketing network of SAIL as on 1st April, 2010 consists of 37 Branch Sales
Offices, 67 Warehouses (Departmental and Consignment Agencies) and 26
Customer Contact Offices.
STRENGTH AND WEAKNESSES:
Strength:
The diversified product mix and multi location production units are an area
of strength for the company. SAIL as a single source is able to cater to
the entire steel requirement of any customer. Also, it has a nation wide
distribution network with a presence in every district in India. This makes
quality steel available throughout the length and breadth of the country.
SAIL has the largest captive iron ore operations in India, which takes care
of its entire requirement. With plans in place to expand the mining
operations, the company will continue to be self sufficient in iron ore
after completion of the on-going phase of expansion.
SAIL's captive power plants take care of about 70% of its total power need.
With augmentation of capacities of power plants operated under Joint
Venture, the Company will continue to have security in this key input in
future as well.
SAIL's large skilled manpower base is a source of strength. There is
emphasis on skill based training in the company. The expanded capacity will
be operated with more or less similar number of employees in future. In
fact, with selective recruitment and regular attrition on account of
superannuation, the number of employees is likely to come down over time,
while there will be improvement in overall skill set.
The Company has one of the biggest in-house research and development
centres in Asia. SAIL's RDCIS (Research & Development Centre for Iron &
Steel) is a source of regular product and process innovation.
Low overall borrowings lend strength to the company's balance sheet as it
can mobilize resources while keeping the leveraging at manageable levels.
Weakness:
SAIL is dependent on the market purchase for a key input - coking coal. As
India does not have sufficient coking coal deposits, most of
the supply is from external sources. As international practice in purchase
of coking coal is through annual/quarterly price contract, it exposes the
company to market risk if the steel prices crash but input prices remain
unchanged.
A large manpower base results in higher manpower cost as a proportion of
turnover for the company. Although there has been significant reduction in
manpower through natural and other separations, the manpower strength in
SAIL is still higher than the industry average.
A part of the operations in the company continues to be from energy
inefficient processes viz. open hearth and ingot route of production, which
will be eliminated only after the completion of the current expansion
program.
At present around 20% of the products are in the form of semi-finished
steel, resulting in lower value addition. This will continue till new
rolling mills planned under expansion plan contribute to value addition as
almost all semis will be converted to finished steel.
E. REVIEW OF FINANCIAL PERFORMANCE:
1. Financial Overview of SAIL:
Global business witnessed a worldwide downturn in all sphere of business
including steel industry in the second half of 2008-09. The global economy
started recovering gradually during 2009-10. The company reoriented
production in line with market demand, substantially increased production
of value added steel and achieved the saleable steel production of 12.6 MT
representing 114% of capacity utilisation. Sales volume of saleable steel
also improved by 7 % at 12.1 MT as against 11.3 MT in 2008-09. The steel
prices which were at its lowest during October-December'08, started
recovering gradually from January 2009 onwards, but at a very slow pace.
Towards the end of current year, the steel prices reached its peak for the
financial year 2009-10.
1.1 Financial Performance:
Particulars 2009-10 % increase(+)/
(Rs. in crore) decrease(-) over
Previous year
Sales Turnover 43935 -9.9%
PBDIT 11871 8.5%
Profit Before Tax (PBT) 10132 7.8%
Profit After Tax (PAT) 6754 9.5%
Despite higher sales volume of saleable steel for FY 2009-10, SAIL achieved
the turnover of Rs. 43935 crore which was lower by 9.9% as compared to
previous year mainly due to reduction in average net sales realisation of
saleable steel during 2009-10. However, as compared to CPLY, the
profitability improved due to higher saleable steel production (1.1%) and
sales volume (7%), improved production of value added products (24%),
improvement in BF productivity, reduction in coke rate and specific energy
consumption, favorable impact of input prices, particularly of imported
coal, nickel, ferro manganese, silico manganese, aluminium etc., reduction
in ocean freight on imported coal, reduction in stores & spares
consumption, repair & maintenance expenses, optimization in procurement,
prudent funds management, curtailing cost of production, etc. The
profitability was affected due to lower net sales realisation, increase in
royalty on minerals, higher interest cost and depreciation etc. The profit
before tax of Rs. 10132 crore was higher by Rs. 733 crore over previous
year (Rs. 9399 crore).
1.2 Initiatives taken by the SAIL Management :
Cost Control Measures
* Emphasis on cost reduction and productivity improvement continued during
the year through systematic application of new technology, process
improvement through R&D efforts and strong awareness to control cost at all
levels of operation.
* Continuous monitoring of procurement of high value items, maximising use
of in-house engineering shops and optimisation in procurement including
negotiations with suppliers for price reduction.
* A saving of Rs. 1082 crore was achieved during the year through cost
control and revenue maximization. Several strategic actions were taken to
achieve cost control savings in major areas of operation viz. optimisation
of coal blend, higher yield, reduction in specific energy consumption and
coke rate, higher BF productivity, higher CC production, low power
consumption and improvement in other techno-economic parameters.
Funds Management:
During the year, the Company continued its thrust on better fund
management. The high cost short term loans were replaced with low cost
debts. Also, the Company earned interest of Rs. 1772 crore through short-
term deposits with scheduled banks. The Company continued to maintain its
virtual debt-free status with term deposits with Banks of Rs. 22023 crore
against borrowings of Rs. 16511 crore as at the year-end. The total debt
during the current year increased by Rs. 8948 crore on account of
borrowings for capital expenditure. M/s FITCH and M/s CARE, RBI approved
credit rating agencies, maintained 'AAA' ratings indicating the highest
safety, to SAIL's long term borrowing programme.
To ensure faster and timely payment to suppliers, contractors, employees,
etc. e-payments were increased substantially and it covered almost 80% of
total payment.
Contribution to SAIL Gratuity Trust:
During the year, the Company contributed Rs. 850 crore to SAIL Gratuity
Trust. The total contribution made by the company as on 31.03.2010 was Rs.
3350 crore. The fund size had grown to Rs. 4037 crore as on 31.03.2010,
including returns on investments made by the Trust.
Capital Investments:
* The Company had undertaken modernization and expansion plan to increase
capacity of Hot Metal production from 13.82 MTPA to 23.46 MTPA
progressively in the current phase.
* Orders for all major packages of ISP and SSP, stand alone and other part
packages of BSL, BSP, RSP & DSP were placed. These packages are under
implementation. The finalization of orders for balance packages are in
progress.
* During FY 2009-10, capital expenditure of Rs. 10,606 crore was made (Rs.
5,233 crore in previous year) which has been funded by a mix of borrowings
and internal accruals.
2. ANALYSIS OF THE FINANCIAL PERFORMANCE OF THE COMPANY:
a) Sales Turnover
(Rs. in crore)
Particulars FY 2009-10 FY 2008-09 Change %
Sales of Saleable 41826.37 46172.21 -9.4%
Steel Products
Sales of Other Products 2108.33 2565.90 -17.8%
Total Sales Turnover 43934.70 48738.11 -9.9%
Less: Excise Duty 3383.32 5534.05 -38.9%
Net Sales Turnover 40551.38 43204.06 -6.1%
Sales turnover decreased to Rs. 43935 crore, mainly due to reduction in
average net sales realisation during 2009-10. Saleable steel sales
constitute about 95% of total turnover and were lower by 9% over CPLY.
Sales of other products like coal chemicals, pig iron were also 18% lower
from CPLY. The Company's main business arena continued to be the domestic
market, which provided about 98% of its total sales turnover. Saleable
steel exports at 3.27 lakh tonne during 2009-10, were higher by about 31%.
Export incentives of Rs. 31 crore were earned during the year.
The Company catered to almost the entire gamut of the mild steel business -
Flat products in the form of Plates, HR coils/sheet, CR coils/sheets,
Galvanised plain/Corrugated Sheets and Long products comprising Rails,
Structurals, Wire-rods and merchant products. In addition, Electric
Resistance Welded Pipes, Spiral Welded Pipes, Electric Tin Plates and
Silicon Steel Sheets formed part of company's rich product-mix. The
proportion of saleable steel and other sales turnover during 2009-10 was as
follows:
Products Category % of Sales Value
Saleable Steel:
Integrated Steel Plants 90.1
Alloy & Special Steel Plants 5.1
Total Saleable Steel 95.2
Secondary Products
(ingots, pig iron, scrap,
coal chemicals etc.) 4.8
Total 100.0
b) Other Revenues
(Rs. in crore)
FY2009-10 FY2008-09 Change %
Other Revenues 820.90 602.42 36.3%
Other revenues increased by Rs. 218 crore, i.e. by 36% over previous year.
During FY 2009-10, there was foreign exchange gain against loss in 2008-09.
c) Expenditure (Net of Inter Account Adjustments)
(Rs. in crore)
FY FY Change
2009-10 2008-09 %
Raw Materials Consumed 16037 18867 -15
Employee Remuneration & Benefits 5417 8461 -36
Stores & Spares Consumed 2574 2824 -9
Repairs & Maintenance 570 625 -9
Power & Fuel 3364 3183 6
Freight Outward 674 769 -12
Interest 402 259 55
Depreciation 1337 1288 4
Other Expenses 2264 2603 -13
Less : Finished Products (-)589 (-)570 3
Internally Consumed
The decrease in raw material cost was on account of reduction in input
prices, particularly of imported coal, ferro & silico manganese, nickel and
other ferro alloys and reduction in ocean freight on imported coal. The
stores & spares consumption and repairs & maintenance expenses were reduced
by 9% each.
The impact of estimated provision for salaries and wages was due to wage
revision implemented w.e.f. 1.1.2007.
d) Contribution to Exchequer:
During the year, SAIL contributed Rs. 11,133 crore to the national
exchequer by way of payment of taxes and duties to various government
agencies, which was less by Rs. 1262 crore over 2008-09 mainly on account
of lower excise duty rates.
e) Secured & Unsecured Loans
(Rs. in crore)
Particulars FY2009-10 FY2008-09 Change %
Secured Loans 7755.90 1497.64 418
Unsecured Loans 8755.35 6065.19 44
Total Loans 16511.25 7562.83 118
The total loans were increased by Rs. 8948 crore during the year, mainly on
account of additional borrowings for meeting working capital requirements
and capital expenditure.
f) Fixed Assets
(Rs. in crore)
Particulars FY2009-10 FY2008-09 Change %
Gross Block 35396.19 32852.42 8
Less: Depreciation 21780.91 20547.03 6
Net Block 13615.28 12305.39 11
Capital Work-in-progress 15026.13 6549.71 129
Gross Block increased by Rs. 2544 crore mainly due to projects
commissioned/capitalized during the year. The capital work-in-progress
indicates the expenditure incurred on various capital schemes under
implementation.
g) Current Assets, Current Liabilities and Provisions*
(Rs. in crore)
Particulars 2009-10 2008-09 Change %
Inventories
Semi-finished/Finished Products 4660.39 5817.84 -20
Stores & Spares 1710.58 1732.68 -1
Raw Materials 2656.49 2610.67 2
Total Inventories 9027.46 10161.19 -11
Sundry Debtors
Gross Debtors 3660.79 3208.39 14
Less: Provision for doubtful debts 166.89 180.62 -8
Net Debtors 3493.90 3027.77 15
Cash & Bank Balances 22436.37 18264.67 23
Other Current Assets 780.34 1014.96 -23
Loans & Advances 3343.09 2207.18 51
Total Current Assets 39081.16 34675.77 13
Current Liabilities 10936.86 7688.67 42
Provisions 6211.67 9450.64 -34
Total Current Liabilities
& Provisions 17148.53 17139.31 -
*As at the end of the respective financial year.
The inventories decreased mainly on account of reduction in semi/ finished
inventory by Rs. 1157 crore and stores & spares inventory by Rs. 22 crore.
However, there was increase in raw material inventory by Rs. 46 crore.
The decrease in finished/semi-finished inventories by 20% was due to
decrease in quantity and valuation rate on account of reduction in both
cost of production or Net Sales Realisation, whichever applicable.
The stores & spares inventory was reduced by 1% and raw material inventory
had increased marginally by 2%.
Loans & Advances increased by Rs. 1136 crore. The increase was mainly on
account of increase in advances recoverable from contractors and suppliers,
employees, deposits with port trust, tax authorities, railways, etc.
Increase in current liabilities by Rs. 3248 crore was mainly on account of
increase in sundry creditors for capital works, advances from customers,
security deposits etc. The provisions were decreased by Rs. 3239 crore
mainly on account of decrease in provision for gratuity, taxation and wage
revision.
3. Plant-Wise Financial Performance (Before Taxes)
(Rs. in crore)
Plant/Unit 2009-10 2008-09
Bhilai Steel Plant (BSP) 4270.48 4965.45
Durgapur Steel Plant (DSP) 647.09 754.25
Rourkela Steel Plant (RSP) 1339.79 1011.20
Bokaro Steel Plant (BSL) 2085.05 1292.78
IISCO Steel Plant (ISP) 178.97 -182.36
Alloy Steels Plant (ASP) -29.89 -110.25
Salem Steel Plant (SSP) 5.22 2.82
Visvesvaraya Iron & Steel Plant (VISL) -100.68 -149.29
SAIL Refractory Unit (SRU) -10.88 -4.57
Central Units/RMD 1746.88 1818.85
SAIL: Profit Before Tax (PBT) 10132.03 9398.88
SAIL: Profit After Tax (PAT) 6754.37 6170.40
The profit before tax of most of the plants/units during 2009-10 was higher
except at Bhilai Steel Plant, Durgapur Steel Plant, SAIL Refractory Unit
and Central Units. However, the Profit after Tax (PAT) of SAIL during 2009-
10 was increased by Rs. 584 crore due to strategic actions taken by the
management like increase in value added products, improved techno-economic
parameters, optimization in procurement, budgetary control for stores &
spares and repair & maintenance expenses, prudent cash management, etc.
MATERIALS MANAGEMENT:
The downturn in prices continued into 2009-10, and so were the efforts to
reduce the costs. Controls on new purchases, receipts were rigorous and
there was thrust on reduction in specific consumption. A number of new
items were also brought under central procurement to benefit from the
economies of scale. The second half of the year saw volatility in the price
of commodities and the strategy of frequent tenders and short validity of
prices was adopted to optimize costs. During the year Reverse Auction was
increasingly used for procurement of revenue and capital items at
competitive prices and the value of such purchases through Reverse Auction
route increased 300% over 2008-09. Towards raw material security,
international sources of Low Silica Limestone were identified and imports
made for ongoing field trials.
FOREIGN EXCHANGE CONSERVATION:
The Company endeavors to procure equipment, raw materials and other inputs
from indigenous sources to the extent they become available to the company
at the commercially acceptable prices/costs and meet the requirements of
the technologies being used in the company. Further, the Company also takes
reasonable steps to ensure that all receivables in foreign exchange, which
are due to the company, are realized within contractual period. As regards
incurrence of expenditure in foreign currencies, besides exercising the
requisite control, it is also ensured that it is in the commercial interest
of the Company.
F. PROJECT MANAGEMENT
The Company incurred a capital expenditure of Rs. 10,606 crore during 2009-
10.
Major Projects completed
The following projects were completed during the year:
* Sendzimir mill upgradation; Rotary Polisher; Roll Grinding Machines; 2
nos. Ladle cranes; Load Block Sub-Station; Load Centre Sub-Station under
SSP Expansion.
* New Normalising Furnace at Plate Mill; Cooling bed, Pilers & other
equipment in Plate Mill (expansion packages), Main Step Down Station-V;
Electro Magnetic stirrer for Bloom Caster in Steel Melting Shop (SMS)-II;
Thyristorisation of Plate Mill stands; 30 MLD Sewage Treatment Plant at
Bhiali Steel Plant.
* Online ultrasonic testing machine at plate mill; New Coke Oven Gas
Holder; Uprating of Turbo Blower; Rebuilding of Coke Oven Battery-4 at
Rourkela Steel Plant.
* Provision of Air Turbo Compressor & Oxygen Turbo Compressor at Oxygen
Plant; Coking Coal Storage Facilities in Coal Handling Plant; Extension of
covered slag yard of SMS-II; Upgradation of Blast Furnace-3 Stoves at
Bokaro Steel Plant.
* Installation of Bloom Caster in SMS at VISL.
* Replacement of 12 no. of Medium HP Locos by high HP locos at different
plants.
Major Capital (AMR) Schemes presently in progress Capital Projects valued
at about Rs. 3600 crore (costing more than Rs. 20 crore) are under
implementation at SAIL Plants. The objective/ benefit envisaged for major
projects is given below:
Bhilai Steel Plant (BSP)
* 4th Air Separation Unit of 700 tonnes per day capacity is being installed
in Oxygen Plant-II to meet the increasing requirement of oxygen, nitrogen &
argon.
* Rebuilding of Coke Oven Battery No.6 has been taken-up for incorporating
state-of-the-art pollution control equipment to achieve the latest
statutory emission norms of Ministry of Environment & Forests.
Rourkela Steel Plant (RSP):
* Coal Dust Injection system in Blast Furnace-4 is a technical necessity
for reduction in coke rate and improvement of the blast furnace
productivity.
* A new Oxygen Plant of 700 tpd capacity is being installed to produce
Oxygen mainly for enrichment in blast furnaces and production of other
gases (Nitrogen & Argon) for steel making process.
* Simultaneous Blowing of BOF Converters of SMS-II has been taken up for
enhancing the production capacity of the shop from 1.68 Mtpa to 1.85 Mtpa.
For this, major facilities envisaged are strengthening of secondary
refining facility, piping network for oxygen, nitrogen, water and other
utilities, material handling facilities like ladles, slag pots, cranes etc.
Bokaro Steel Plant (BSL)
* Coal Dust Injection in BF-2&3 system is a technical necessity for
reduction in coke rate and improvement of the blast furnace productivity.
* 2nd Ladle Furnace in SMS-II would facilitate production of value added
steel, especially steel grades with low sulphur content, reduction in
return heats, savings in oxygen consumption & ferro alloys, besides
creating a buffer station for longer sequence at casters & flexibility in
operation.
* The replacement of 6 no. of Battery Cyclones of 720,000 m3/hr with 6 no.
of Electrostatic Precipitators of capacity 900,000 m3/ hr is being carried
out in three machines of the Sinter Plant for cleaning of sinter process
gas to meet the statutory requirement of emission level of outlet dust at
150 mg/Nm3 as prescribed by Central Pollution Control Board.
* One new Turbo-Blower along with associated facilities is being installed
to meet the enhanced cold blast requirement of Blast Furnace-2 at blower
discharge volume of 4000 Nm3/min and discharge pressure of 3.9 kg/ cm2 at
blower end.
* The Blast Furnace-2 is being upgraded to increase the working volume from
1758 m3 to 2250 m3 with higher productivity level (2t/m3/day) by
incorporating state-of-art technology in the blast furnace proper.
* Rebuilding of Coke Oven Batteries 1 & 2 with pollution control facilities
has been taken up for achieving the emission standards as per CPCB norms of
Govt. of India.
IISCO Steel Plant (ISP):
* Rebuilding of Coke Oven Battery No.10 has been taken-up wherein state-of-
art pollution control equipment shall be incorporated to achieve the latest
statutory emission norms of Ministry of Environment & Forests (MOEF) along
with the renewal of By-product Plant.
RMD:
* The proposal for enhancing loading capacity at Bolani Iron Ore Mines,
modification of Railway line, overhead electrical work and signalling &
telecommunication has been taken up to enable full rake (in one stretch)
loading at both Fines as well as Lump Siding, resulting in reduced loading
time and savings on demurrage.
* Enhancement of production capacity of Meghahatuburu Iron Ore Mines (Main
package) has been taken up to increase production capacity at Meghahatuburu
Iron Ore Mines from 4.3 Mtpa to 6.50 Mtpa of finished product.
* Replacement of locos at BSP, RSP & BSL has been taken up to replace the
old medium horse power locos by high horse power locos.
Modernisation & Expansion Plan:
* Work is in progress for various approved packages of Modernisation &
Expansion plan of IISCO Steel Plant, Salem Steel Plant, Bokaro Steel Plant,
Bhilai Steel Plant, Rourkela Steel Pant and Durgapur Steel Plant. Expansion
of Salem Steel Plant (SSP) is in advance stage of completion and the
facilities shall be completed progressively by 2010-11.
* Cumulatively orders placed under expansion and modernization are of the
order of about Rs. 45,000 crore.
G. IN-HOUSE DESIGN & ENGINEERING:
Centre for Engineering & Technology (CET) is providing its services in the
areas of modernisation, technological upgradation and, additions,
modifications and replacement schemes to plants and units within SAIL and
clients outside SAIL - both in India and abroad.
H. RESEARCH & DEVELOPMENT CENTRE:
Research & Development Centre (RDCIS) of the Company have provided
innovative technological inputs to different units of SAIL, with special
emphasis on cost reduction, quality improvement, product development,
energy conservation and automation. In the year 2009-10, RDCIS had pursued
111 R&D projects, out of which 66 projects have been completed.
During the year, the RDCIS has filed 31 patents and 29 copyrights. As many
as 63 technical papers were published and 105 papers were presented. In
addition, RDCIS undertook contract research work and provided significant
consultancy services and know-how to organisations outside SAIL, yielding
external earning of Rs. 266.64 lakh including an external grant. While the
consultancy services were provided to Ministry of Coal, Govt. of India;
RINL, Visakhapatnam; and IIL, Dolvi, specialised technology know-how was
transferred to M/s. Monarch Electronics (India), Kolkata; M/s. Refcom,
Purulia; M/s. IFGL, Kolkata ; and OAL, New Delhi.
The Centre has bagged 10 prestigious awards; 7 of these pertain to National
Metallurgists' Day Celebration, 2009.
I. ENVIROMENTAL PROTECTION AND CONSERVATION
The key role of Environment Management Division is to facilitate the
management of environment and pollution control activities around the steel
works and mines of SAIL located across the country and liaisoning with
state and central regulatory agencies regarding environmental matters. The
division ensures continual improvement in environmental protection and
conservation, resource conservation and reduction of green house gas
emission, whereby contributing to reduction in global warming as given
below:
The initiatives taken by the Company towards environment protection and
conservations are:
Eco-restoration of De-graded areas under the SAIL-DU-DBT programme:
* Three mined out sites selected for ecological restoration are: limestone
mined out area at Purnapani, iron ore mined out areas at Kalta and Barsua.
149.32 acres at Purnapani, 10.22 acres at Kalta and 20.1 acres at Barsua
have been restored so far. Species planted have shown lush growth.
* 34000 saplings at Purnapani, 12000 saplings at Barsua and 2000 saplings
at Kalta have been planted during 2009-10 under the eco-restoration
programme. In all three mines, nursery has been developed for raising
saplings.
* Pisciculture is practiced in the abandoned quarries filled with water at
Purnapani, by releasing 8 lakh fingerlings, mainly the species of Katla,
Rohu and Mrigal.
Clean Development Mechanism (CDM):
* SAIL took the initiative of identifying 71 CDM projects, out of which 23
projects are in advanced stage. During FY'10, 6 VER projects have been
registered with total carbon credits of about 1.9 million tonnes.
* Action initiated for monetization of the accrued carbon credits through
on-line trading using e-platform.
CTC Phase out project:
* SAIL along with UNDP took up an umbrella project for the replacement of
Carbon Tetrachloride (CTC) used as cleaning solvent by Trichloroethylene at
the 6 production units of SAIL viz. Bhilai Steel Plant, Durgapur Steel
Plant, Rourkela Steel Plant, Bokaro Steel Plant, IISCO Steel Plant and
Salem Steel Plant. SAIL shall cease using Ozone Depleting Substances (ODS)
in future production activities with equipment funded under the project in
its Works. The systems have been installed.
Asia Pacific Partnership on Clean Development & Climate (APPCDC)
* SAIL is actively associated with several climate change initiatives
including participation in Asia Pacific Partnership on Clean Development &
Climate (APPCDC). 7th & 8th Steel Task Force meeting and technical workshop
of APPCDC was held in St. Louis, USA and in Toronto, Canada during April &
October 2009 respectively. Each member country briefly reported the major
activities and trends in energy pattern and climate change policy of their
respective country. SAIL being one of the task force members, attended the
above two meetings.
Implementation of ISO 14001:
* In accordance with National Environment Policy, SAIL is building a
management system at its different plants and units for further
environmental protection. So far, EMS certification have been accredited to
the following units of SAIL:
* BSP (whole plant and township)
* BSL, DSP and SSP - entire plant
* RSP (Silicon Steel Mill, Sinter Plant II, Hot Strip Mill, Plate Mill,
Environment Engineering Department, ERW Pipe Plant, SW Pipe Plant, Special
Plate Plant and RSP Township)
* ISP (Rolling Mill Complex)
* Dalli Iron Ore Mine
* Meghahatuburu Iron Ore Mine
* Kiriburu Iron Ore Mines
* Bolani Ore Mines
* During the year, certification audit for ISO 14001 at Kuteswar Limestone
Mine was carried out by BIS. BIS has recommended favourably for accredition
to ISO 14001.
J. TECHNOLOGICAL CONSERVATION:
During the year, efforts have been put by the units of SAIL towards
resource conservation through following manner:
* Maharashtra Elektrosmelt Limited (MEL), Chandrapur has entered into an
agreement with Western Coal Fields Ltd. (WCL) for dispatching Si-Mn
granulated slag for stowing in the underground mines of WCL as partial
replacement of sand.
* Utilisation of BOF sludge by SP in base mix preparation for sinter making
as replacement of equivalent mount of lime.
* Reclamation and processing of over 80,000 tonnes generated iron ore
fines/sub grade mineral of old dumps of Dalli (Manual) Mines recovered
through existing Crushing Screening Washing Plant (CSW) of Dalli (Mech.)
Mines as a measure of conservation of minerals.
* ~33200 tonnes of iron fines from Hitkasa tailing dam slime by operating
Fluidised Bed Classifiers in CSW plant at Dalli (Mech.) Mines.
Reduction of Green House Gas Emission:
SAIL has taken initiatives towards improving the energy efficiency of steel
making operations, thereby bringing additional benefits of pollution
control and reduction of Green House Gas emission. The initiatives shall be
a step towards containing global warming, facilitating SAIL to build the
platform for drawing Clean Development Mechanism (CDM) benefit.
During the year 6 VER projects have been registered with a total carbon
credit of ~ 1.9 million tonnes. Action has been initiated for monetization
of the accrued carbon credits through on-line trading using e-platform.
K. CORPORATE SOCIAL RESPONSIBILITY:
SAIL's Social Objective is synonymous with Corporate Social Responsibility
(CSR). Apart from the business of manufacturing steel, the objective of the
company is to conduct business in ways that produce social, environmental
and economic benefits to the communities in which it operates. For any
organization, CSR begins by being aware of the impact of its business on
society. The Credo of SAIL specifically highlights the commitment towards
society at large which states inter-alia 'Making a meaningful difference in
people's life'.
The Company's business philosophy encompasses a triple bottom line approach
covering the economic, environmental and social dimensions reflecting
SAIL's commitment to build natural, human and societal capital.
The Company is also working towards preserving culture and heritage. Some
of the key activities include assistance to maintenance of monuments in
Lodhi Garden, New Delhi. In order to preserve the tribal culture of
Chhatisgarh, 5 day Chhattisgarh Lok Kala Mahotsav celebrated in which
around 350 artists participated and more than 10,000 people attended.
'Durgapur Grameen Nritya Pratiyogita', a dance competition was also
organised in Durgapur in which 546 members of 63 teams participated from
the peripheral villages.
Besides, the Company extended support to a number of activities for the
benefit of physically challenged persons and destitute woman. Special
project SUSHRUTI for treatment of hearing impaired patients and Project
SNEH for Rehabilitation of Leprosy patients initiated by RSP.
The objective of the Company is to focus on Income Generating Schemes
(through Self Help Groups), Education & Health issues. In line with the
above themes, SAIL is working in tandem with State Government of
Chhattisgarh for establishing a Technical University at Bhilai,
Chhattisgarh & State Government of Jharkhand. Foundation stone has been
laid for setting up an ITI at Samastipur, Bihar. Besides these, Special
School has been started exclusively for poor, underprivileged children at
five integrated steel plant locations. Free education, mid-day meals,
uniforms including shoes, text books, stationery items, school bags, water
bottles and transportation in some cases are being provided to students. A
number of scholarships are being provided to deserving SC/ST undergraduate
engineering students. BSP has adopted 114 tribal children, 4 Girl students
for Nursing course. BSL, Bokaro is providing free education, boarding and
lodging facilities, etc. to 14 Tribal students. In BSP, no tuition fee is
charged by the Company Schools from SC/ST students. Mid-day meals being
provided daily to more than 22000 children in schools in and around Bhilai
in association with Akshay Patra Foundation. Project KISHORI has been
initiated by RSP for Empowerment of adolescent girls of peripheral
villages.
In the field of Health Care, free medical health centres for poor have been
set up which provide free medical consultation, medicines, etc. More than
3850 camps have been organised in 2009-10, benefiting over 2.32 Lakh
people. To help the poor and downtrodden, 11 number of MMUs/Ambulances have
been provided to various NGOs. A special rural sanitation drive for 100%
sanitation in five villages in the periphery of RSP has been started with
40% of the cost being shared by the villagers, benefiting around 3000
people.
Vocational training has been provided to more than 18,000 villagers in the
2009-10 (in areas such as Improved agriculture, Mushroom cultivation,
Goatery, Poultry, Fishery, Piggery, Achar/Pappad/Agarbati making, Welder,
Fitter & Electrician Training, Sewing & Embroidery, Smoke less chullah
making etc.) In line with the focus of Income Generating Schemes, a
vocational Training centre for rural and unemployed youth by 'Bhilai Ispat
Kaushal Kutir' has been set up and Skill Development and Self Employment
Training Institute (SDSETI) has been set up for the benefit of the women
and girls of the Model Steel Villages by Durgapur Steel Plant. An exclusive
shop for marketing of the products manufactured at Swayam Siddha centres
has also been set up at Bhilai Township.
L. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY:
The Company has an efficient system of internal controls for achieving the
following business objectives of the company:
* Efficiency of operations
* Protection of resources
* Accuracy and promptness of financial reporting
* Compliance with the laid down policies and procedures
* Compliance with laws and regulations.
In SAIL, Internal Audit is a multi-disciplinary function which reviews,
evaluates and appraises the various systems, procedures/policies of the
Company and suggests meaningful and useful improvements. It helps
management to accomplish its objectives by bringing a systematic and
disciplined approach to improve the effectiveness of risk management
towards good corporate governance.
The Company has taken a number of steps to make the audit function more
effective. The Internal Audit is subjected to overall control environment
supervised by Board Level Audit Committee, providing independence to the
Internal Audit function, emphasizing transparency in the systems and
internal controls with appropriate skill-mix of internal audit personnel
etc. Annual Audit Plans based on identification of key-risk areas with
thrust on system/process audits and bench-marking of the best practices
followed in the plants/units is implemented so as to achieve overall
efficiency improvement including cost reduction in operation of the
Company. Development of Internal Audit Executives, bringing awareness
amongst auditees, converging on the pro-active role of internal audit
remained other focused areas during the year.
The Internal Audit system is supplemented by well-documented policies,
guidelines and procedures and regular reviews are being carried out by our
Internal Audit Department. The reports containing significant audit
findings are periodically submitted to the management and Audit Committee
of the Company.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis, describing the
Company's objective, projections and estimates are forward looking
statements and progressive within the meaning of applicable security laws
and regulations. Actual results may vary from those expressed or implied,
depending upon economic conditions, Government policies and other
incidental factors.
Annexure-III to the Directors' Report
A. Energy Conservation:
(a) Measures taken:
Important energy conservation schemes implemented in SAIL during 2009-10
are listed below:
(i) Bhilai Steel Plant (BSP)
(a) Commissioning of VVVF drive in belt feeders of Wagon Tippler in CO &
CCD area done for multiple speed operation of motor, controlled withdrawal
of material from hopper
(b) At Sintering Plant #2, magnetic water feeding started to PMD & SMD for
better dispersion and reduction of moisture addition in sinter mix and
preheating of sinter charge by steam at intermediate bunker
(c) At SP #3, stopping of idle running of Product Line-3 & reduction in
idle running of flux route equipment during route starting and running of
two hammer crushers (HT Motors) in place of three for Flux Crushing.
(d) Installation & commissioning of BF#2 Tar Injection System through in-
house resources
(e) At SMS-II, LF-2 ID fan 1&2 damper opening closing circuit modified for
energy saving.
(f) At R & S Mill, substitution of DC motor of Rolling Field Roll Table no.
1 of Plate Mill by AC motor along with VVVF drive and commissioning of 16
nos. of VVVF drives in place of conventional contactor scheme
(g) At Plate Mill, (i) Provision of low voltage (145 VDC) system for
armature supply of single and double rack pusher (ii) Provision of low
voltage (145 VDC) system in field supply of roll tables motor under spray
cooling devices (iii) Installation of VVVF drives in Transfer Bed 2 and
Inspection Bed 3 and (iv) Hot charging of slabs of caster#6 to Plate Mill
(h) Installation of 7 nos. of new energy efficient pumps sets for different
pump houses of CCS secondary cooling, Plate Mill Scale Pits and 2.5 MT
Rolling Mills area
(i) Improvement in area illumination of ETP tunnels by replacing ordinary
bulbs with energy efficient HPSV lamps
(j) Replacement of (i) 2200 mm dia BF gas line for supply of BF gas to coke
oven batteries #1 to #8 and (ii) modification of 1200 mm dia mixed gas line
to 1600 mm dia pipeline
(ii) Durgapur Steel Plant (DSP):
(a) Introduction of Multi Slit burner in machine #1 of SP # I (RDCIS)
(b) Stabilization of CDI in BF#3 & BF#4 (RDCIS)
(c) On-line sealing of steam and blast leakages
(d) Insulation of steam line and other hot surfaces
(iii) Rourkela Steel Plant (RSP):
(a) Commissioning of coke oven battery #4
(b) Commissioning activities for new 1,00,000 m3 CO gas holder is going on,
which is likely to be put on operation in 3rd week of April' 10.
(c) Replacement of 1000 sq. meter damaged insulation
(d) Inter plant energy audit of SMS - II, CCM-II & RMP - II
(iv) Bokaro Steel Plant (BSL)
(a) Introduction of high temperature ladle heating system in SMS-II
(b) Dry gunniting of ovens @ 17 ovens /month
(c) Operation of steam exhauster in by product plant for 250 days/ annum
(d) Up-gradation of stoves of BF # 3 during capital repair
(e) Increase in Tar injection in BF # 1
(f) Increase in Oxygen enrichment in all Blast Furnaces
(g) Reduction in process steam consumption by operation of BOO oxygen plant
(h) Capital repair of 5 recuperators of soaking pits
(i) Replacement of 16 km water line & 17000 m2 of damaged steam line
(j) Provision of 45 nos. steam traps
(k) Increase in CO Gas supply to RMP kilns
(v) IISCO Steel Plant (ISP)
(a) Thermal insulation of steam pipelines & hot air ducts
(b) Upgradation of combustion system and instrumentation for improvement in
performance in reheating furnace of heavy structural mill (RDCIS)
(c) Modified grizzly of 20 mm size in coke sorting plant
(d) Skid replacement in Reheating furnace of M & R Mill
(b) Important energy conservation schemes under implementation in the year
2010-11 are listed below:
(i) Bhilai Steel Plant (BSP)
(a) Waste heat recovery from sinter cooler for hot water generation at SP #
1 & SP #2I (RDCIS)
(b) BF-4 stove modernisation
(c) Installation of new LD gas holder.
(d) Commissioning of new Normalising Furnace at Plate Mill with in-
house resources
(e) Modification of BF gas burner in Boiler#1 of PBS to utilize surplus
BF gas (RDCIS)
(ii) Durgapur Steel Plant (DSP)
(a) Introduction of Multi Slit burner in machine #2 of SP # I and SP#2
(RDCIS)
(b) Modification of combustion system in reheating furnace #1 & #2 of
Section Mill (RDCIS)
(c) On-line sealing of steam and blast leakages
(d) Insulation of steam line and other hot surfaces
(iii) Rourkela Steel Plant (RSP)
(a) CDI in BF#4
(b) Tar injection in BF #1
(c) Modification of multi-slit burner for mixed gas firing in SP-I
(d) Introduction of mixed gas firing in MP boilers for partial replacement
of oil/coal firing
(iv) Bokaro Steel Plant (BSL)
(a) Commissioning of battery #1 & #2 after rebuilding in Dec'10 & Jan'11
respectively; wall repair of coke oven battery #4; revamping of door and
door frame cleaner of battery #5; change of all pusher side doors of
battery #7; change of 50 nos. leveler windows of battery #6 & #8
(b) Running of steam exhauster in BPP for maximum no. of days
(c) Dry gunniting of ovens @ 25 nos. oven per month
(d) Integration of 24 nos. of old weigh feeders with new system for proper
blending of coal.
(e) Commissioning of CDI system for BF #2 & #3
(f) Up-gradation of BF #2 along with GCP
(g) Up-gradation of stoves of BF #5 during capital repair of BF #5 (h)
Introduction of soft starters for 2 nos. exhausters at SMS-1
(i) Modernisation of soaking pit no. 8 & 23 with castable lining
(j) Change of metallic recuperator of RHF #3 at HSM and repair of
roof top of RHF #4 during capital repairs
(k) Repair of 15 nos. base fans in annealing -1 of CRM
(l) Change of 10 km damaged pipe line of different diameter
(m) Change of 18000 m2 damaged insulation over process steam line
(n) Installation of 50 nos. steam traps
(o) Commissioning of additional B.F.Gas line for BPSCL(Power plant) to
supply surplus B.F.gas
(p) On-line ladle heating system for hot metal transfer ladle and ladle
heating system in LRS - I & II. (RDCIS)
(v) IISCO Steel Plant (ISP)
(a) Introduction of BF gas in boiler - A unit
(b) Rebuilding of coke oven battery #10
(c) Oxygen enrichment of blast in BF #2
(c) Impact of measures on energy consumption
The overall energy consumption for the year decreased by about 0.3%
compared to previous year.
(d) Total Energy Consumption & Energy Consumption per unit of production.
Form 'A' enclosed.
B. Technology Absorption
Efforts made in Technology Absorption are given in Form 'B'
C. Foreign Exchange Earnings and outgo
(Rs. in crore)
i) Foreign exchange earned from exports 783.00
and other activities
ii) Foreign exchange used:
a) CIF Value of import 14061.21
b) Other expenditure in foreign currency 80.81
For and on behalf of Board of Directors
Sd/-
Place: New Delhi (C.S. Verma)
Dated: 21.08.2010 Chairman
FORM 'A'
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY
Particulars 2009-10 2008-09
A. POWER & FUEL CONSUMPTION
1. ELECTRICITY
a) Total Power Purchased (including JV Power)
Units (Million KWH) 6631 6507
Total Amount (Rs. crore) 2294 2202
Average Rate per Unit (Rs./KWH) 3.46 3.38
b) Own Generation
Through Steam Turbine/Generator
Units (Million KWH) 797 902
Units per Gega Calories of energy input 225 220
Average Rate per Unit (Rs./KWH) 4.67 4.15
2. COAL
i) Coking Coal
Quantity (Million Tonne) 13.60 0.733
Total Cost (Rs. crore) 11951 166
Average Rate (Rs. per tonne) 8786 2268
ii) Non-Coking Coal
Quantity (Million Tonne) 13.84 0.985
Total Cost (s. crore) 14088 195
Average Rate (Rs. per tonne) 10181 1982
3. FUEL OILS
Quantity ('000 Kilo Litres) 37 50
Total Cost (Rs. crore) 105 161
Average Rate (Rs./Kilo Litres) 28439 32245
4. OTHERS
i) Coke
Quantity ('000 Tonnes) 79 248
Total Cost (Rs. crore) 187 501
Average Rate (Rs. Per tonne) 23529 20203
ii) Miscellaneous.
(LPG, Gases, Process Steam etc.) 461 379
Total Cost (Rs. crore)
B. CONSUMPTION PER TONNE OF SALEABLE STEEL PRODUCTION
2009-10 2008-09
Purchased Electricity (KWH) 498 500
Fuel oils (litres) 3 4
Coking Coal (kgs) 1083 1108
Coke (kgs.) 6 20
Non-coking Coal (kgs) 56 76
Notes:
1. Purchase Electricity quantity includes power from Joint Ventures also.
2. Proportionate pig iron production is added to saleable steel production
for above calculation.
3. 2008-09 figures have been recalculated including SRU data since the
merger of SRU with SAIL.
4. Purchased/ BOO Oxygen has not been considered in Form A.
FORM 'B'
DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION
1. Specific areas in which R & D activities were carried out by the Company
* Cost Reduction
* Quality Improvement
* Energy Conservation
* Product Development and Application
* Automation
2. Benefits Derived as a result of R & D efforts (2009-2010) Cost Reduction
* Improvement in Productivity of SP-I at RSP:
Operational constraints like, low suction, leakages, and high FeO sintering
were overcome through a numbers of R&D inputs, essentially in terms of
optimisation of various process parameters e.g. rotational speed of Primary
Mixing Drum, moisture in sinter mix, air flow through sinter bed,
segregation on the sinter bed etc. Suction level underneath the sinter bed
for both the machines was improved @ 65-70 mm wc by installing blank plates
near the side plate regions of pallets resulting in increase in Burn
Through Point (BTP) temperature by 50 C avg. A special dust legs sealing
system, operated with an improved Programmable Logic Controller (PLC) based
Double Cone Double Acting (DCDA) Valve was also introduced. Significant
improvement in productivity was achieved from 0.88 to 0.92 t/m2/hr due to
increase in machine speed.
* Decreasing Coke Rate of BF #3 at ISP:
With an aim to decrease coke rate, a numbers of corrective measures were
taken in the plant operating practices; the salient ones are: optimization
of blowing parameters by maintaining a RAFT in the range of 1900-1950 C
with the use of hot blast temperature of 700-720 C and adding adequate
quantity of steam (1-2 ton/hr); modification in the charging sequences and
combination of mix charging (COOC ) and layer charging (CC OO ); raising of
Stock level to 6 feet level as compared to earlier 8 feet level to enhance
the gas utilization thereby to increase the wind acceptability of the
furnace; and practising periodic alkali flushing through maintaining lean
slag and low RAFT operation in order to minimise the bad effect of alkali
on blast furnace operation.
Implementation of above measures resulted in an increase in production rate
to around 1000 t/day on monthly basis from Nov'09 onwards along with a coke
rate of about 770 kg/thm.
* Increase in BOF lining life at DSP
A record lining life of 6249 heats in converter # 1 has been achieved
through identification of the critical operating parameters affecting
lining life and practising the recommended SOPs for steel making,
refractory repair, slag splashing, MgO super saturation by use of calcined
dolomite and avg. tap temperature of 1680 C.
* Stabilisation of Twin Hearth Furnace Practice for operating with high Si
(>1.8%) and high P (>0.25%) Hot metal in SMS, ISP
A nomogram was developed and followed for modified charge mix sequence of
the furnace for better slag formation and bath temperature control. This
has resulted in the opening and final phosphorous values within 0.09% and
0.03% respectively without bath feeding of flux. The refining time has thus
been reduced by 40 minutes from 3 hrs 15 minutes to 2 hours 35 minutes due
to modified practice.
* Improvement in Performance of Soaking Pits by Using New Generation
Monolithic in its Walls, BSL
A modified lining pattern with composite lining involving 70 % Al2O3
special LCC, dense and light weight fireclay bricks and ceramic fibre was
designed and installed in Pit no 32 along with specially designed flexible
type SS-304 anchors for taking care of the mismatch in thermal expansion of
refractory lining and metallic shell and thus preventing development of
cracks in the monolithic lining. An enhancement of the life of the pit by >
11 months (from an average 9-12 months to > 23 months) was achieved.
Subsequently two more pits, nos. 16 & 19 were also converted to modified
lining design and these are still running smoothly.
* Stabilisation of Steel Ladle Lining Life with In-house Bricks at RSP
With modified zonal lining with Al2O3-MgO-C bricks in bottom impact area
and MgO-C bricks in other areas, 41 ladles of SMS-II have been lined with
in-house bricks and an average lining life of 110 heats has been achieved
for 33 ladles. The best life achieved was 140 heats which is highest-ever
in SAIL. At SMS-I, one ladle was lined with in-house brick and lining life
of 72 heats has been attained as against the earlier 44 heats.
* Improvement of roll life by modified cooling system at Roughing stands of
HSM at BSL
A modified roll cooling system was designed and commissioned at the
Roughing Stands (R1 to R5) of Hot Strip Mill (HSM) at BSL. It has
significantly reduced the fire-cracks formation on the roll, thereby roll
grinding off-take by 25~30%. The specific roll consumption also reduced by
30-35% (from 0.0331kg/t to 0.0226kg/t in R1 and from 0.164 to 0.104 kg/t in
R2 to R5). There is also improvement in productivity, shape and quality of
hot strip.
* Improvement in Roll Performance of CRM and SSM with NDT Assisted Roll
Grinding at RSP
Surface and sub-surface defects in CRM and SSM rolls, induced during
service, were detected through Non Destructive Testing (NDT) with Eddy
Current and Ultrasonic flaw detection systems. Subsequent removal of all
the mechanical and thermal cracks on work rolls ensured availability of
completely defects-free rolls in the Mills.
With the introduction and continuous application of these systems, the
specific roll consumption (SRC) has reduced by 62.6% in case of Tandem
Mill-Work Roll (Mill Stand #1) and 20.5% for Tandem Mill-Work Roll (Mill
Stand #2-5). Similarly, SRC has decreased by 25.4% in case of CR-1/Skin
Pass-1 Mills-Work Rolls. Premature Spalling has also been reduced by more
than 50% in TM and 80% in CR-1/SP-1.
Quality Improvement:
* Development of Killed Quality Blooms for Forging / Cold Reducing
Applications at DSP
Based on thorough analysis of the existing flux and de-oxidation practice
during tapping at BOF and LF, three operational parameters, which are
responsible for the ladle and SEN clogging during casting of low carbon
aluminium killed steels (LCAK) in the bloom caster, were identified. As a
remedial measure, de-oxidation practice, slag composition and CaSi
treatment were optimised to form liquid inclusions. Inclusion flotation
treatment was introduced to remove mainly Al2O3 inclusions from the liquid
steel. Steel refining at LF with optimum window of CaSi injection, slag
reduction and inclusion flotation treatment at the end of refining
facilitated successful casting. Casting parameters were also modified to
meet the quality requirement of customer with respect to acceptable bloom
macro.
* Improvement in Productivity and Strip Surface Quality by Modified
Emulsion Application System at TCM-I, CRM at BSL
The concept of double row spray was introduced through a modified emulsion
application system to impart effective cooling of work roll as well as
better lubrication at the work roll-strip interface. In addition, total
emulsion flow has been redistributed for mild cooling of back-up rolls
besides intense cooling of work roll for reduction of roll thermal camber.
It also helped to wash-over the loose iron particles picked up by the roll
during rolling process and thereby reducing the iron pick-up defect from
0.20 to 0.02%. Diversion on account of bad shape defect could be reduced
from 0.36 to 0.02%. Strip surface reflectance was improved by 10% at Skin
Pass Mill-I. With a reduction in specific roll consumption from 1.36 to
1.19 kg/t, average monthly production has increased from 37,782 to 40,087t.
* Improvement in Surface Quality of Tinned Strips at ETL at RSP
The genesis of wood grain surface defect in electrolytic tin plate (ETP) in
ETL/ RSP was investigated with Auger and scanning electron microscopy along
with energy-dispersive analysis. The genesis of wood grain could be
identified as the non-uniform reflow and localized unwetting of Sn in
reflow melting. ETL chemical parameters have been also analysed and surface
characteristics have been evaluated for both RSP and BSL TMBP sheets wrt
level of surface contaminants and roughness. A set of recommendations e.g.
maintain Phenol Sulphonic Acid (PSA) at 1-2 g/l (as free acid) in flux
tanks# 9 and 10; maintain roll roughness 3-3.5 ?m in Stand#1 and 0.4 ?m in
Stand#2 of SPM#3; restrict roll crown to 0.04 and 0.02 ?m for Stands#1&2;
restrict TMBP surface roughness to < 0.5 ?m; set roll replacement schedule
in SPM#3 at 200 t; and maintain Sn2+ concentration at 20-25 g/l and plating
temperature ? 40 C for brighter/ leveled electrodeposits, were formulated
for the remedial actions; these are being implemented by RSP.
Energy Conservation:
* Introduction of Energy Efficient Ignition System in SP#1 at DSP
Curtain flame ignition system has been commissioned in machine # 1,
resulting in reduction in specific heat consumption by 48% from 27 to 14
Mcal/t of sinter and GHG emission to the tune of 3,000 tonne per annum
because of lesser consumption of gaseous fuel. Concurrently increase in
production was achieved from 94.8 to 100.9 t/hr. i.e. an increase of 6%, a
part of which is due to faster ignition and consequent increased
availability of strand length for sintering.
* Improving the Thermal Performance of Reheating Furnace of HSM at ISP
A number of engineering modifications e.g. bifurcation of the existing gas
pipe lines for achieving the differential gas flow rate between front and
back end of burners, installation of two control valves, a radiation
pyrometer at roughing stand, and a furnace pressure transmitter in middle
of back wall, were introduced in both the reheating furnaces of Heavy
Structural Mill at ISP. The specific fuel consumption has come down by 25%
from 0.608 to 0.454 Gcal/tcw in Nov-Dec'09. Scale deposition in hearths
near back wall has also come down and the yield increased from 90.94% to
91.43%.
* High temperature ladle heating system in SMS-II at BSL
Commissioning of high temperature ladle heating system in two ladle heating
stands has resulted in much faster heating of ladle to the requisite
preheat temperature i.e. 1200 C within 15 hrs as against 800 C in 24 hrs
with the existing ladle heating burner. High ladle temperature is expected
to reduce skull formation which would lead to increase in ladle lining
life. Decrease in gas consumption due to high efficient burner has been
attained.
* Delay Strategy Model for Reheating furnaces at Plate Mill, BSP
A heating control model has been developed and implemented at all three
reheating furnaces of Plate Mill at BSP. This has effected auto control of
gas flow rate during mill delay and thereby reduction of the specific
energy consumption. A saving of 400 Nm3 per zone of mixed gas has been
achieved for a delay of one hour.
Product Development and Application
* Development and Commercialisation of Identified Special Steel Products at
RSP
The difficult-to-cast medium carbon grades were developed by optimizing
casting and hot rolling parameters through SMS-I route. The total tonnage
of all three grades of medium carbon steel (MC 40, MC 55 and C 30 grade of
higher Mn) dispatched was 16,891 tonnes against the target of 10,000
tonnes, facilitating extra revenue generation.
* Development of High Strength (YS 640 Mpa Min) Roof Bolt Quality TMT Bars
at ISP
Stringent quality requirement in terms of mechanical properties and rib
pattern for roof bolt grade TMT bars as per BS 7861 (YS 640 MPa min and 18%
EL min.) has been met successfully at ISP in 22mm size for the first time
in SAIL. About 1100 T material could be processed successfully with ISP and
DSP billets.
* API X-65 grade ERW pipes as per PSL 2 specification at RSP
Feasibility of producing API X-65 pipes of PSL-2 specification in the
recently modernized ERW pipe plant was established through successful
processing of one 150 T heat of API X-65 steel into 14' dia pipes;
properties of all the pipes conformed to API specification.
* Development of microalloyed high strength cost-effective steels using
nitrogen-enriched vanadium at BSP
Microalloyed high strength cost-effective steel was developed replacing
costly ferro vanadium (Fe-V) with nitrogen enriched vanadium compound
(Nitrovan). The properties obtained were: YS - 550-600 Mpa; UTS - 698-780
Mpa; and EL - 13-21% in SAIL HITEN 690 AR grade plates having 0.15%
vanadium when partially replaced with Nitrovan. This has resulted in saving
of 0.03% vanadium leading to a substantial cost saving to the tune of
Rs.800/t.
* Development and Commercialisation of High Strength Formable Grades at BSL
High Strength Formable Quality (HSFQ 450 grade) steel was developed at BSL
using innovative alloy chemistry with Nb (0.03-0.04%) and Si (0.2-0.3 %)
which resulted in superior formability properties in terms of higher
elongation (32 %) and hole expansion ratio (45 %) coupled with lower YS/UTS
value (0.86) as compared to BSK 46 of similar YS value. Addition of Si in
HSFQ grade led to ease of casting due to increased flowability, better
desulphurization during secondary refining and reduction of cost. The hot
rolled coils were cold reduced from 4.6 mm to 2.05 mm and annealed
successfully at M/s Hero cycles. Cold rolled and annealed material met the
high UTS requirement (500 MPa min) to cater to the need of automotive
segment in high tensile applications.
* Development of Alternate Chemistry for LPG Grade with Improved
Formability & Reduced Cost of Production at BSL
In order to reduce the cost of production of Liquefied Petroleum Gas (LPG)
grade without compromising the end-product properties, an innovative alloy
was designed with higher 'Si' (0.1-0.2%) and lower 'Mn' (0.3-0.4%). Heats
were processed through LF-CC route. Concast slabs were processed into to
2.9 x 1160 mm size by adhering to conventional processing parameters. Cost
reduction to the tune of Rs. 477/t was achieved on account of substituting
MC Fe-Mn by Si-Mn and Ca-Fe by Ca-Si.
Large scale field trials were conducted with coils of newly developed LPG
grade steel at major LPG cylinder manufacturers, where the material was
found to be comparable to that of LPG with lower Si (~ 0.04%) and higher Mn
(~0.45 %). More than 40,000 t of the newly developed grade was supplied
yielding a savings of > Rs. 1.9 crores.
Automation:
* Automation of Cooling Bed # 1 & 2 and Bar Shears at Merchant Mill
Newly introduced PLC system & soft logic in Merchant Mill at DSP has
eliminated malfunctioning of earth roll detector for kick-off operation and
cut down the electrical down time in cooling bed area drastically by 71 %
(per month). The HMI developed will help to log critical events of cooling
beds and bar shear area of merchant mill facilitating immediate corrective
action in case of any breakdown.
* Automation of Sinter Charging Belts of BF, BSL
In continuation with the automated start & stop operations of four charging
sections of BF conveyors, three additional sinter charging sections were
automated for auto operation. This has resulted in reduction of start-up
time from 15 to 5 minutes in each section. Centralised CCTV system was also
installed for monitoring of critical charging zones and the long unmanned
belts which has reduced charging delays through early fault detection.
3. Future Plan of Action:
R&D programmes identified for the next five years are as follows:
Technology Areas Objectives
Coal, Coke & Chemicals * Improvement in coal carbonization practice and
coke quality and yield of by-product.
Iron & Sinter * Maximising of BF productivity with Indian iron
ore through in-furnace investigation.
* Reduction in coke rate and assimilation of new
iron making technologies.
* Improvement in sintering technology to achieve
performance of sinter plant to international
level.
Steel Making & Casting * Reduction in cost of liquid steel through
improved productivity and reduced level of
inputs in BOF and secondary refining units.
Refractories * Improvement of manufacturing technology for
MgO-C bricks for BOF converter lining
* Application of self flowing castables for
ladle lining.
Rolling Technology * Improvement in the operational efficiency
of Rolling Mills
* Improvement in the productivity and quality
of hot and cold rolled products.
Product Development * Development of special steel grades for oil &
gas, railways, defence, construction,
agriculture, engineering & fabrication segments.
* Development of corrosion resistant rail steel.
Energy Conservation * Development and introduction of fuel efficient
burners.
Automation & * Introduction of automation and control systems
Computerisation for productivity, yield and quality improvement
in steel plant production units.
Environment & Pollution * Assessment of PAH and NOX
Control
* Development of process for anaerobic-anoxic-
aerobic treatment of coke ovens effluent to meet
norms.
4. Expenditure on R&D:
(Rs. in crore)
Capital 4.32
Revenue 102.94
Total 107.26
% of Turnover 0.24
TECHNOLOGY ABSORPTION, ADAPTATION & INNOVATION:
Technology development, absorption, adaptation and further improvement are
continuously taking place in SAIL in different areas of steel plant
operation through a definitive technology strategy and intensive R & D
efforts. A number of new technologies are installed/ being installed as a
part of modernisation/ continuous improvement. These area-wise include:
Area: Coke Making
* A new 7 m tall environment friendly Coke Oven Battery No.6 (with Coke Dry
Quenching) of RSP
* Rebuilding of environment friendly Coke Oven Battery No.1 & 4 of RSP
* Rebuilding of environment friendly Coke Oven Battery No. 5, 1 & 2 of BSL
* Rebuilding of environment friendly Coke Oven Battery No. 5 & 6 of BSP
* Rebuilding of environment friendly Coke Oven Battery No. 2 of DSP
* Coke Dry Quenching in new 7 m tall Batteries at ISP, BSP & RSP
* Selective crushing of Coal (for improved coke quality) at DSP
* Partial Briquetting of Coal Charge for improving coke strength at BSP &
RSP
Area: Sinter Making
* Base Blending for Sinter mix (for improved sinter quality)
* System for recovery of sensible heat from sinter for increased energy
efficiency in ignition furnace at the new Sinter plants of BSP, DSP & RSP
* Modern automation & control for improved and consistent quality of
sinter by optimization of sintering process
Area: Iron Making
* Coal Dust Injection (CDI) in four Blast Furnaces at BSP, two Blast
Furnaces at DSP, four Blast Furnaces at BSL and one Blast Furnace at RSP
for reducing Coke rate and cost of production of hot metal. This technology
is further being extended to other Blast Furnaces.
* Coal Tar Injection facilities are being installed at two Blast Furnaces
of BSP and one Blast Furnace each at BSL, DSP & RSP
* Two stage Gas Cleaning Plant in three Blast Furnaces at BSP, two Blast
Furnace each at RSP & ISP and one Blast Furnace at BSL (for improvement in
quality of BF gas)
* Introduction of INBA Cast House Slag Granulation technology in three
Blast Furnaces each of BSP & RSP, two Blast Furnace of DSP and four Blast
Furnaces of BSL for improving productivity, reduce environmental pollution
and gainful utilization of BF Slag
* Introduction of High Hot Blast technology in Blast Furnaces stoves
* Closed Loop Cooling System with De-Mineralised water in three Blast
Furnaces of BSP and one Blast Furnace each of BSL, RSP and ISP for
enhancement of campaign life of furnaces
* Cast House Fume Extraction Process in three Blast Furnaces at BSP, two
Blast Furnaces at BSL and one Blast Furnace each at RSP & ISP as a
pollution control measure
* Flat Cast House design in three Blast Furnaces of BSP and one Blast
Furnace each of BSL, RSP & ISP for use of mobile equipment in Cast House
and easy maintainability
* Top Recovery Turbine in one Blast Furnace each of BSL, BSP, RSP & ISP for
generation of power
* Under burden probe in two Blast Furnaces each of BSL & BSP and one Blast
Furnaces each of RSP & ISP
* 4000 m3 Blast Furnaces at BSP, ISP & RSP
Area: Steel Making:
* Hot Metal Desulphurisation system after mixer for charging low sulphur
hot metal in the BOF converters for improved steel quality at RSP & BSP
* New state of the art steel melting and casting facilities at ISP, BSL,
BSP & RSP
* Introduction of combined blowing technology (for improved product
quality) in SMS-II, BSL
* Introduction of RH Degassing for improved rail steel product quality in
SMS-II of BSP
* Introduction of Electro-magnetic stirring (for improved product quality)
in the continuous casting machines at VISL, DSP, ASP and BSP
* Introduction of thin slab casting & direct rolling at BSL
Area: Rolling & Finishing (Long Products)
* Ultrasonic testing of plates in Plate Mill (for quality assurance of
plates) at BSP
* Ultrasonic testing and Eddy current testing facilities (for quality
assurance of rails) at BSP
* Long rail finishing technology at Rail & Structural Mill, BSP
* Slit rolling in Merchant Mill (for increased productivity and broader
product range) in Merchant Mill of DSP
* Hydraulic Automatic Gauge Control in Plate Mill (for achieving close
thickness tolerances) at BSP
* State of the art Bar & Rod Mill and Universal Rail & Beam Mills at DSP,
ISP & BSP
* Installation of Walking Beam Reheating Furnace (for improved product
quality, yield and reductions in energy consumption) in Blooming Mill of
DSP
Area: Rolling & Finishing (Flat Products)
* Laminar Strip Cooling, Hydraulic Automatic Gauge Control, Work Roll
Bending (all for improved product quality) in the Hot Strip Mill of BSL &
RSP
* Installation of Walking Beam Reheating Furnaces (for improved product
quality, yield and reductions in energy consumption) in the Hot Strip Mills
of BSL & RSP and Plate Mills of RSP & BSP
* State of the art Cold Rolling Mill complex at BSL
These technologies have been adopted /being adopted and are being gradually
absorbed by the plants. No other major technologies were imported by the
Company during the last five years.
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