July, 01 2005
SAIL takes the lead in cutting prices
Indian steel producers, led by the Steel Authority of India (SAIL), have finally given in to market pressure and cut prices by Rs 500-2000 a tonne.
A SAIL spokesperson said the new rates will come into effect from tomorrow.
Essar Steel too is cutting its price. Building inventories and a glut in the international market are forcing steel players to cut prices, said an Essar executive. Although the company has not decided the extent of the cut, analysts expect it to follow the market trend.
Ispat Industries too is reducing its price. Price cuts will be announce in a day or two, said an official at the company.
Monnet Ispat managing director Sandeep Jajodia too hinted that his company could cut prices, saying: We have to follow the market trend.
Defying the Market trend is Jindal Stainless, which is still upbeat with regard to the domestic demand and refusing to cut prices. The companys director-finance, Arvind Parakh, said the bottom line of the company was healthy and, in spite of raw material prices shooting up, Jindal stainless would not cut prices
The price cut by domestic players mirrors international trend
South Korean steel giant Posco has already announced that it would lower prices of hot-rolled coil produced from mini-mills by 2.5 per cent to $ 567 per tonne from July. It also plans to cut prices of wire rods by 7 per cent.
Mittal Steel has already announced that it would be cutting its global steel production by 1 million tonnes in the third quarter to compensate for lower demand
Arcelor, the worlds second-largest steel producer, has also said that it would continue to cut output in the third quarter as it did in the first half.
Supply strain on steel
Is the party over for steel sultans across the world? Nobody is sticking necks out with a definite answer, but the recent trend does not paint a rosy picture for an industry cruising along historic highs until a few months ago.
Consider the facts: China, the largest consumer of steel, is increasingly buying less from the international market while shipping out more of its own products. Steel exports from the country rose a whopping 110 per cent in May.
In the first four months of 2005, imports were 9.1 million tonnes (mt) compared with 16 mt in the same period last year. At the same time, exports zoomed to 11 mt from 2.8 mt same time last year. The glut in the international market due to lower demand has forced leading players like Mittal Steel, Arcelor and Posco into output cuts. After peaking at $750 a tonne, prices have crashed to $500.
Back home, steel majors have reduced prices by Rs 2,000 a tonne over April rates. SAIL today announced cuts of Rs 500-2,000 a tonne across various categories, making it the second successive slash in as many months.
However, the global steel industry is putting up a brave face, saying the slump is a temporary phenomenon. World Steel Dynamics, a leading steel information service, predicts prices will bottom out by the third quarter this year.
Mittal Steel, too, has swatted fears that China would remain a net exporter of steel sell more to the world than buy.
The demand has not slackened, only production has outpaced it. A correction is inevitable, an industry expert said.
The glut in the domestic as well as international market has been partly caused by users who bought more than their requirements for fear of having to pay ever-rising prices
IISCO registers huge profit
After three long decades, the Indian Iron and Steel Company Limited, a century-old steel plant, recorded a profit of nearly rupees two hundred crore in its last financial year. The plant had been incurring heavy losses since the past few years.
But the turning point was Chinas 2008 Beijing Olympic which brought in huge profits for the concern, informed an official of Iisco. While talking to The Statesman at Burnpur last week, this same official also claimed that the merger of IISCO and SAIL, which has been approved by the Union cabinet, has also helped to mend the broken fortunes of the concern.
A few visits, made by the officials of SAIL, to the Burnpur factory unit convinced them that it could well be a profit-making concern. They, therefore, gave their consent to the merger, he said.
A kind of fine-dust, obtained from iron ore, had been lying in heaps at the Burnpur factory for years.
The authorities of IISCO floated a tender, to sell it off at a minimum price, in order to clear the occupied land.
But no one showed any interest in buying it. But the announcement of the 2008 Beijing Olympic changed the scene. Chinas engineers need fine dust extract from iron ore, for carrying out construction works of Olympic villages and stadiums.
They, therefore, floated a global tender for its procurement. Seizing this golden opportunity, IISCO submitted its tender and received the order. Since then loads of fine dust have been shipped to China from the Haldia docks.
It was learnt that the Union cabinet while approving the merger of IISCO and SAIL also paved the way for the pouring in of Rs 8,000 crore as a part of the plants revival plans. Fresh recruitment have also been made after a long time.
The wages of the 16,000-strong workforce will also be revised to set them at par with their SAIL counter parts.
About Rs 4,400 crore will be allotted to the Burnpur plant for the setting up of a new 2,000 cubic metre blast furnace, 200 square metre sinter plant, and bloom billet caster among others.
CPI to oppose Chiriya deal
Any attempt to hand over the Chiriya iron ore mines in West Singhbhum to the Mittals will be opposed by the CPI, warned Bhuvaneshwar Prasad Mehta, the party MP from Hazaribagh.
The MP was here to attend the second state conference of the party.
Accusing chief minister Arjun Munda of hobnobbing with capitalists and steel tycoons, the CPI parliamentarian said the Jharkhand government seems anxious to hand over Chiriya to Lakshmi Niwas Mittal.
Speaking on the governments claim that Indian Iron and Steel Company has not bothered to renew the Chiriya lease, the CPI parliamentarian pointed out that all steel plants take possession of mines on a long-term basis and, therefore, the states contention is untenable
Orissas pride is Bengals envy
West Bengals loss has been Orissas gain. Steel giant Posco initially had plans to start their Indian innings in West Bengal. But the lackadaisical attitude of Jyoti Basus government more than a decade back prevented them from doing so.
Ten years ago Posco in a joint venture project with the S K Birla group had wanted to set up a Cold Rolling Mill (CRM) just opposite to the land where Haldia Petrochemicals Ltd is currently situated. Posco had applied for 300 acre of land and also had paid an advance of Rs 3 crore in 1995 through the S K Birla group. But inspite of waiting for more than seven years the land was not allotted to them. As of now the state is yet to return the advance that they had taken.
The Birla group had also opened up a company called Birla Metal for the joint venture project. Officials of Posco had also visited Haldia a number of times to hold meetings and conduct surveys. They had also prepared a feasibility report about the project. Officials from Birla Metal had also visited the Posco factory in Pohang in South Korea a number of times in 1996.
Buddhadev Bose, a senior officer of Birla Eastern (a subsidiary of the S K Birla group) stated here on Wednesday that Posco had more or less made up their minds to set up shop in West Bengal. "They had invested quite a huge amount to set the ball rolling through various administrative channels." Bose, however, at this moment is more concerned about getting the refund for the advance amount from the state government.
"They are yet to return more than a crore of rupees. Even 10 days ago we had written to chief minister Buddhadev Bhattacharya to expedite the matter," stated Bose.
Even though senior officials of the West Bengal Industrial Development Corporation (WBIDC) are desperate to hide facts, Lakshman Seth, the member of Parliament from Haldia stated that he was aware of such a development. "But the Congress government at Delhi prevented the acquisition of land. That is why the state government failed to provide the land to Posco," stated Seth. He was also candid enough to state that it was a costly lapse for all those associated with the deal.
"If they had started the CRM then they would have definitely invested more in the state. They wouldnt have looked at Orissa and the Rs 52,000 crore project would have certainly come to West Bengal," added Bose. As of now, he just sits in his chamber and allows nostalgia to affect him.
And waits, while looking at the memorabilia watch that Posco officials had gifted him during their first meeting for the time when the refund of the advance amount will finally come by.
It is a classic case of neighbours envy, owners pride. What could have been West Bengals pride and Orissas envy has just been reversed.
Harichandans fuss a farce, says Naveen
Chief Minister Naveen Patnaik slapped on the State BJP leaders on their antagonism to POSCO by by reiterating that the Central BJP leadership was very positive on the proposed steel project. On his return from Delhi after attending the two-day National Development Council (NDC) meeting, Naveen on 29th June said that the fuss created by industry minister Biswa Bhusan Harichandan is nothing more than a farce. Let the BJP leaders come to me to discuss about POSCO instead of going to their Central leaders, the chief minister said.
Naveen was categorical in his remark to the media that BJP president L.K.Advani was very positive and encouraging to the efforts of his government in signing the POSCO deal. It may be mentioned here that industry minister Harichandan and State BJP chief Jual Oram had air dashed to Delhi to air their grievances on the POSCO affair before the partys Central leadership. Harichandan especially was very vocal when he said that Naveen absolutely kept the State BJP leadership in dark on the POSCO affair. It was very evident from the fact that not mote than a couple of times were the BJP ministers involved in discussions with POSCO out of 25 meetings on the issue.
The chief minister said it was surprising that Harichandan reacted in this manner when he had already signed on the POSCO file. Moreover, the CM said, Harichandan was a member of the empowered committee that finalized the POSCO deal. Naveen said, the State Government has taken a decision and there is no going back, as everything has been one in a transparent manner, no matter what the BJP alleges.
Naveen said that almost every member in the NDC had congratulated Orissa on the successfull deal with the South Korean steel major
SJM joins protests against Posco
Close on the heels of the BJP, the Swadeshi Jagaran Manch today joined in the chorus of protests against the Posco MoU by raising critical issues relating to iron ore reserves, environment and the massive dose of concessions being extended to the South Korean firm.
Talking to reporters here today state convener of SJM Mr Bibhu Prasad Nayak said the entire deal was struck by a handful of IAS officers working behind closed doors. The lack of transparency and the reluctance to debate on points raised by several quarters was shocking, he alleged.
Exposing the hollowness in CM Naveen Patnaiks claims to discussion and transperancy, Mr Nayak and Mr Arpan Ghosh of the SJM said even cabinet ministers were in the dark. We know for certain that at least two cabinet ministers who hold portfolios related to steel, mines and industry were unaware of the controversial provisions of Posco deal. One of them has gone public stating he had asked for certain clarifications which had not been given to him at the high power committee meeting.
Questions raised by the media, open letters written by a host of persons including two former union steel ministers, MLAs and even the SJM have not been answered by the CM so how could he claim to be open to discussion or of being transparent, they charged.
Voicing their objections to the Posco deal, the SJM leaders said 37 MoUs for steel plants have been signed and if these materialises the steel production will be over 47 million tonnes which in turn will require 2250 million tonnes of iron ore. Such mindless industrialization will result in disappearance of iron ore reserves over the next three decades.
Next comes the coal requirement which shall be of the order of 55 million tonnes. All this will lead to destruction of the environment. On specifics of the Posco deal, they noted that besides the controversial swapping of iron ore clause, there was mention of an additional 400 million tonnes of ore being sought by the company purely for trading purposes.
Dismissing the tall claims of revenue generation and employment, the SJM said attempts to declare the plant within a SEZ area, extending all benefits under the IPR etc meant that the revenue to the state will be minimal. The highly mechanized plant will not generate much of employment and even the talk of Rs 51,000 crore FDI is unrealistic in the sense that much of the amount will go towards the purchase of machinery from abroad.
SJM leaders asked the government to come clean and face a debate on the deal
Nod for Vizag Steel expansion soon
The Rs 8,500-crore expansion proposal of Visakhapatnam Steel Plant (VSP) is expected to get the approval of the Cabinet soon.
With the expansion, VSPs liquid steel production capacity will go up to 6.3 million tonnes from the existing 3 million tonnes.
Addressing mediapersons here on Thursday, Mano Ranjan, secretary, ministry of steel, Government of India, said, The Public Investment Board (PIB) had chalked out the expansion plan of VSP and we are expecting the Cabinet's nod within a couple of months. Ranjan, however, ruled out the merger of VSP with SAIL
The steel ministry does not have any such proposal, he said.
The new steel policy, which will be presented before the Cabinet in July for approval, envisages 100 million tonnes of production by 2019-20 in the country, he said
During last fiscal, the country produced about 38 million tonnes of steel which is expected to go up to 50 million tonnes in the next three years. By 2019-20, the steel production in the country will touch 100 million tonnes.
Several new private and foreign companies are setting up steel units in
India. Besides, the existing units are also going in for expansions. Owing to these reasons, the countrys steel production is expected to touch 50 million tonnes within the next two to three years, he said
The new steel policy will lay emphasis on production of special steel, which is currently below 10 per cent of the total production and exports of steel products. The country currently exports about 6 million tonnes of steel, which is about 16 per cent of the total production
Our target is to export at least 25 per cent of the countrys total steel production, Ranjan pointed out. To boost the production of special steel in the country, the government is also providing funds for research and development.
According to Ranjan, the drop in steel prices in the international market is likely to increase the imports of steel in the current year
Steel prices have dropped by $150 per tonne in the international market because of which steel imports have increased in the last couple of months, he said.
Last year, steel imports were about 2 million tonnes.
To formulate guidelines for granting mining licenses by various state governments, the central government has set up an experts committee which will prepare the guidelines on mines leasing, he said
Jindal South West Steel plans Rs 10,000 cr expansion
Jindal South West Steel (JSW), the Rs 7,000 crore steel major formerly called Jindal Vijayanagar Steel, has outlined a Rs 10,000 crore expansion plan over the next five years. This will see its capacity jump from 2.5 million tonnes to 10 million tonnes per annum in five years.
The expansion is being planned in two stages which will see the company expanding first to 7 million tonnes and then to 10 million tonnes. The company plans to use equity-linked instruments and debt to finance the expansion.
Speaking to Business Standard, Seshagiri Rao, director-finance, JSW, said: We are in the process of expanding our current capacity of 2.5 million tonnes to 3.8 MTPA by March 2006.
JSW is the second largest steel producer in the private sector in India and is a low cost producer. The company, which had earlier raised high-cost debt is now on a debt-reducing exercise. From around a 1.2:1 debt-equity ratio it intends to take it down to 0.8:1 in the near future
Earlier we had raised debt at 15-16 per cent and now we have swapped them for low cost debts around 8 per cent, Rao highlighted
JSW presently has four units under its fold, one near Bellary in Karnataka, two value addition units in Maharashtra and another plant which the company recently acquired in Tamil Nadu
It is our intention to expand our current facilities as we have the required bandwidth at these units. I do not think we will look at a new location for our expansions, he added
On the dip in global steel prices and the resultant cut in production across major steel companies, Rao said: The steel industry is highly volatile and these troughs were expected due to a slump in demand in the three major European economies, Germany, France and Italy. Surprisingly, China is not the reason for the slump.
JSW for FY05 reported a turnover of Rs 7,035 crore and a net profit of Rs 870 crore. In an effort to improve its operational efficiency, the company has implemented Oracle E-Business suite which will help them in purchasing, inventory management, project costing besides others
Rotation for resource pool
Tata Steel will follow a system of rotation from next month under which managers and officers would have opportunities to work in separate areas over a period of time.
We have been following this system for sometime but we will be shifting into a higher gear and make it more structured, says Niroop Mahanty, vice-president (human resource). It would help create a special pool of people who would be familiar with not one but several key functions. It would also help create general managers and leaders, he explains.
The company has already modified its recruitment policy. In a departure from the traditional practice of recruiting freshers from engineering colleges, it has been recruiting people with experience from the industry in a parallel recruitment.
With Tata Steel expanding to Singapore, South Africa, Bangladesh, Iran and elsewhere, says Mahanty, there is an urgency to have a special band of people to lead the projects. He would not admit it but one of the reasons prompting the company to introduce the scheme is the apprehension of higher attrition in the coming years. With more players like Posco, Mittals and Jindals planning plants in eastern India, managers and technical experts from Tata Steel are sure to find themselves in demand. The company is, therefore, gearing up to meet the challenge.
Mahanty, however, chooses to put up a brave face. Attrition in Tata Steel, he says, is around 5 per cent, which is within acceptable limits in the industry. With a workforce of 39,000, it would come to the region of 2,000 people leaving every year. We are concerned but not really afraid, says the HR vice-president. While it is a challenge to retain our people, I believe Tata Steels value and work culture is a strong bond and they will not be easy to take away. For employees joining us, he said, we promise they would be writing a better CV every year they stay with Tata Steel.
He does agree, however, that recruiting freshers is no longer an easy task. Talented youngsters now have different options and they no longer accept jobs blindly. Tata Steel, however, has consciously refrained from joining a salary war. We are definitely not participating in a salary war as there is no end to it. Our salaries may not be the best but they are definitely a benchmark. Moreover, while people are looking for money, they actually want value addition to themselves, said Mahanty.
Retaining people has so far been the least of its worries. Tata Steel has been served by several generations of loyal people, content with the township and culture of the company. But now with increasing competition, the company is exploring ways of retaining people it values.
SAIL sets September date for retirement
Steel Authority of India Ltd (SAIL) today announced yet another voluntary retirement scheme (VRS) scheme and called upon employees to respond by the end of September.
All those employees who have completed 10 years of service or attained the age of 40 years will be eligible.
Managing directors of the SAIL subsidiaries will have the authority to approve applications up to the level of the assistant general manager. But for officers above the rank of AGM, the approval will have to come from the SAIL chairman.
Bokaro Steel Limited (BSL), which has an employee strength of 34,000, would like to reduce its manpower to 25,000 by 2008 and downsize it further to 18,000 by 2012.
BSP sources claimed that 500 to 700 employees are retiring every year and the number is expected to go up to around 1,400 after 2007. With steel technology undergoing revolutionary changes and competition getting tougher, steel plants are required to cut down on operational costs, explained company officials.
If the response to the scheme turns out to be lukewarm, they hinted, SAIL might resort to inter-plant transfer of those employees who have between two and seven years of service left. If senior employees on the verge of retirement are transferred, the officials hoped, they would be more amenable to avail of voluntary retirement.
While BSL is seeking to cut down on manpower, the exodus of more senior people at the middle and top levels is creating a void. Several senior managers and technical experts have already left BSL in recent months to join the Mittals, Ispat group, Kalyani Steel, Usha Martin and others.
With managing director Uday Pratap Singh also due to retire by the year-end, BSL is likely to face an acute shortage of technical hands. A fresh recruitment of experts is on the anvil, said sources.
Ispat Inds Q4 net soars to Rs 167 cr
Ispat Industries (IIL) has posted a net profit of Rs 166.5 crore in the fourth quarter of the fiscal ended March 31, 05, a five-fold increase in its net profit compared to Rs 26.3 crore in the same period last year.
Total income for the period increased 51% to Rs 1703.4 crore. The companys EBIDTA in the fourth quarter was up 120% at Rs 458.2 crore. Interest and finance charges in the fourth quarter dropped 62% to Rs 40.3 crore.
For the financial year ended March 31, 05 IILs net profit stood at Rs 696 crore, a near 15-fold increase compared to the previous fiscal. Total income for the full year increased 60% to Rs 6112.9 crore, EBIDTA for the full year increased 137% to Rs 1496.1 crore.
Interest and finance charges for the full year however have increased by 59% at Rs 534.0 crore IILs earning per share (diluted) in FY 04-05 stood at Rs 7.1 a share as against a negative earning of 0.11 in the previous fiscal
Indian Seamless settles Rs 35 cr debt
Indian Seamless Steels & Alloys Ltd has informed BSE that the company has reached a settlement with UTI in respect of their debt amounting to Rs 35.02 crore.
In terms of the settlement the company will be required to pay an amount of Rs 21.81 crores in full and final settlement of their dues and balance dues amounting to Rs 13.21 crores would stand waived. The said amount is payable within 12 months. The company has thus concluded debt restructuring / settlement with all its secured lenders
