Competitiveness of Indian Steel Industry through Cost Efficiency and Innovation

Ms S Ghosh, Non-member P Gupta, Associate Member Dr R Datta, Non-member Dr D Mukerjee, Non-member

There have been revolutionary changes in the global steel scene with fierce competitive pressures on performance, productivity, price reduction and customer satisfaction. National boundaries have melted to encompass an ever increasing world market. Trade in steel products has been on the upswing with the production facilities of both the developed and the developing countries complementing each other in the making of steel of different grades and specialty for the world market. Innovation and reduction in cost are keys to achieve a competitive edge in the international market. Innovation in its broadest sense includes new technologies, new ways of managing or discovering new market segments. Technology influences cost competencies in the long term which in turn generates price competition in the market. However, in the short term prices are also influenced by capacity utilisation through better efficiency. Innovation results in continuous development of cutting edge solutions in technology, processes and products. Achieving this calls for substantial efforts in R & D, for which, to stay ahead in the competitive world. Competition between steel makers promotes innovation and efficiency. It promotes the growth in steel use and serves steels customer and society as a whole. Post-liberalisation, Indian firms have been under tremendous pressure to improve their competitiveness. The removal of physical restrictions on imports and the lowering of customs duties implied that Indian firms had to be as good (or nearly as good) as their international competitors in order to survive. This accelerated the process of technological absorption. Several companies also pushed ahead in improving production and improving their products so as to be able to add value to their products and improve profitability. The steelmaking and processing technologies have undergone significant changes in the last few decades, in order to make steel more cost competitive and also enhance the performance capability of steel to meet the increasing needs and expectations of market and society. New processing technologies, such as, continuous casting, ladle refining, thermo-mechanical controlled processing, continuous annealing and processing line, endless hot rolling, etc have dramatically improved material property and performance. The steel industry is continuously striving to make its product lighter, stronger and cheaper than ever before. In addition to new technologies, new concepts have been introduced which has led to significant improvement in product property and capability. Ultra low carbon Bainitic steels have fulfilled the long felt need for higher strength level without sacrificing low temperature toughness and weldability properties. Recent development of interstitial free (IF) steel for the auto segment has completely eliminated presence of cementite from microstructure of cold rolled steel sheets and has made it amenable for press forming of complex shaped auto components. Ultra fine grained (1m - 3m) steels have been successfully made in laboratory scale, which has led to high strength levels (YS~800MPa) with excellent impact toughness combination. The paper throws light on global steel scenario and structure of Indian steel industry. A detailed SWOT analysis of Indian steel industry presents various opportunities and impediments in front of the industry during the next few years. Competitiveness of Indian steel industry has been analysed with other global players with the help of various parameters and finally some ways have been suggested. Apart from new concepts and technologies, a number of other measures have been taken up by the Indian steel industry to improve its competitiveness. Such measures include enhancing volume of value added products, reduction in dependence on imported coking coal, creation of infrastructure to sustain 160Mt production by 2020, quality assurance, improved IT strategy, etc. Innovation and cost efficiency keep hand in hand. Innovation not only in product development, but in process, business strategy, marketing strategy, HR policy leads to cost efficiency. This paper provides a detailed overview of the steps to enhance competitiveness of the Indian steel industry through cost efficiency, innovative concepts and new technologies.
Keywords : Indian steel industry; Cost efficiency and innovation; Five forces model; Techno-economic competitiveness of Indian steel industry through benchmarking Ms S Ghosh, P Gupta, Dr R Datta and Dr D Mukerjee are with the RDCIS SAIL Bokaro, Bokaro Steel Plant, Bokaro 827 001. This paper received the Dr M Visvesvaraya Award 2009, which was presented to the authors in the 24th Indian Engineering Congress held at Surathkal during December 10-13, 2009.

INTRODUCTION Steel is considered to be the backbone of human civilization. As the steel industry has tremendous forward and backward linkages in terms of income and employment generation,

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the growth of an economy is very closely related to the quantity of steel consumed by it. Historically, the global steel industry, apart from being subjected to cyclical ups and downs of demand and prices, has also suffered from structural deficiencies of large unutilized capacity and high degree of fragmentation. STEEL : A GLOBAL PERSPECTIVE Long plagued by sluggish sales to slow-growing markets, global steel industry struggled from the mid 1970s until the turn of the century in the grip of a no-win stalemate. Overcapacity was rampant, and any improvement in efficiency designed to cut costs and improve margins inevitably exacerbated overcapacity. But, at the dawn of new millennium, the industry took a new life. Demand surged, fuelled by Chinas booming economy and voracious appetite for steel. From 2001 to 2007, global steel production grew at more than seven percent per year, culminating in a 1343 Mt of crude steel1 in 2007. But worse was still not over. End of 2008 saw a slowdown in steel industry, affected by the global recession. Global steel production decreased by 1.2% in 2008, to 1330 Mt from 1343 Mt in 20072. Global crude steel production during January-April 2009 was 354 Mt, which is 23% lower compared to the same period last year. World steel production in May 2009 (95.6 Mt) decreased by 20% compared3 to May 2008 (120 Mt). Table 1 shows region wise crude steel production in 2008-2009 and Figure1 shows their share of production. It may be observed that only India and China showed a positive growth trend during this period.
Table 1 Region wise crude steel production, 2008-09 Country Crude steel production Production, Mt China Japan USA Russia India World 502 119 92 69 55 1330 Change, % 2.6 -1.2 -6.8 -5.4 3.7 -1.2

INDIAN STEEL INDUSTRY : AN OVERVIEW The Indian iron and steel industry is nearly a century old, and it was the first core sector to be completely freed from the licensing regime. India is the fifth largest producer of steel with total production2 of 55.0 Mt in 2008 (Figure 2). Two Indian companies (SAIL ranks 21st and Tata Steel 8th)4 figure among the worlds 50 largest steel producers. Indian steel industry is growing at CAGR of more than 10% from the period 2003-04 to 2007-085. Assuming a similar growth rate beyond 2007-08, the consumption of steel in the country is likely to touch 160 Mt by 2020, which is a threefold increase from the present level of 55 Mt. The National Steel Policy 2005 projects a more conservative demand of 60 Mt by 2012 and 110 Mt by 2020, based on a CAGR of 7.3% per annum. Thus an additional demand of at least 20 Mt by 2012 and 60 Mt by 2020 is envisaged6, providing a huge opportunity to the steel industry to expand both by installation of entirely new plants or adding new capacity to the existing ones. The steel industry contributes 1.3% to Indias GDP and accounted for 10% in excise duty collections in 2006-07. The industry provides employment to 0.4 million people directly and 0.6 million people indirectly. Structure of the Industry The Indian steel can be divided into two groups of producers. The first group comprises major producers called, integrated steel producers (ISPs). This includes large steel producers with capacities of over one Mt. The main companies in this group are Steel Authority of India Limited (SAIL), Tata Steel, Rashtriya Ispat Nigam Limited (RINL), JSW Limited, Essar Steel and Ispat Industries. It can be seen from Figure 3 that the top six companies account for 60% of crude steel production in India. Figure 4 shows the share of different steel plants in flat steel production and SAIL leads in long product production with 38% share (Figure 5). SAIL has planned to increase its production capacity from 15.0 Mt of crude steel presently to 26 Mt7 by 2012 and 40Mt by 2020. Other integrated steel plants, such as, RINL, TATA Steel, JSW, Essar Steel and ISPAT have also drawn up their growth plans, both through green and brown field projects,
60 50

(Source : World Steel Association) Others 37.07% China 37.75% Production, Mt

44.5 38.4 29.7 30.6 21.4 13.0 15.2 5.1 7.5 1.1 2.4 23.8 50.1 52.6 53.1

40 30 20

4.14% India
Russia

5.18%

6.91%

8.95%

10 0

1950

1960

1970

1980

1990

1993

1995

1998

2000

2001

2004

2005

2006

2007

Japan USA Figure 1 Regionwise crude steel production, 2008-09

Figure 2 Crude steel production of India, 1950-2008

2008

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Others 39.6% Essar, Ispat and JSWL, 16.5% RINL 6.9%

SAIL 26.6% IISCO 10.2%

The second group comprises smaller stand alone steel plants that include producers and processors of steel. Processors/Re-rollers : Units producing small quantities of steel from materials procured from the market or through their own backward integration system. Stand alone units making pig iron and sponge iron. Small producers using scrap-sponge iron-pig iron combination produce steel ingots (for long products) using electric arc furnace (EAF) or induction arc furnace (IAF) route. The secondary steel sector, which is presently of ~ 12 Mt capacity, is likely to be doubled by 2020. All these projections, if realized will lead to total steel production in excess of 200 Mt. MICHAEL PORTERS FIVE FORCES MODEL: UNDERSTANDING COMPETITIVENESS OF INDIAN STEEL INDUSTRY Backed by robust volumes as well as realizations, steel industry has registered a phenomenal growth across the world. The situation in the domestic industry was no exception. In fact, it enjoyed a double digit growth rate backed by a robust growing economy. However, the current liquidity crisis seems to have created medium term hiccups. The steel sector can be analysed through Michael Porters five force8 model (Figure 6) to understand the competitiveness of the sector. The factors of competitiveness range from high to medium to low. Entry Barriers : High Capital Requirement It is estimated that to set-up one Mt/annum capacity of integrated steel plant, it requires around Rs 4000 crores. In the present economic meltdown many Greenfield and Brownfield projects have been deferred due to shortage of capital fund.
SAIL 38%

Figure 3 Share of different steel plants in crude steel production in India SAIL 15%

OTHERS 61%

TATA STEEL 8%

RINL 16%

Figure 4 Share of different steel plants in flat product production OTHERS 4% ISPAT 12%

JSW 13%

Economies of Scale As far as the sector forces go, scale of operation does matter. Benefits of economies of scale are derived in the form of lower costs, R and D expenses and better bargaining power while sourcing raw materials.
Suppliers

ESSAR 15% TATA STEEL 18% Figure 5 Share of different steel plants in long product production

Bargaining power of suppliers Industry competitors Potential entrants Threat of new entrants Rivalry among existing firms Substitutes Threat of substitutes

targeting total capacity of 15 Mt, 33 Mt, 22 Mt, 21 Mt and 15 Mt, respectively by 2020. In addition, new steel companies, such as, Mittal Steel, POSCO, and JSPL have signed MOUs for setting up integrated steel plants of 44 Mt total capacity.

Bargaining power of buyers Buyers

Figure 6 Michael Porters five forces model

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Government Policy There are certain discrepancies involved in allocation of iron ore mines and land acquisitions. Furthermore, the regulatory clearances and other issues are some of the major problems for the new entrants. Product Differentiation Steel has very low barriers in terms of product differentiation as it does not fall into the luxury or specialty goods and thus does not have any substantial price difference. However, certain companies like SAIL, Tata Steel still enjoy a premium for their products because of its quality and its brand value. Competition : High The steel industry is truly global in terms of competition with large producing countries, like China significantly influencing global prices through aggressive exports. Dumping of cheaper products from competitors poses threat to Indian steel industry. Bargaining Power of Suppliers : Medium The bargaining power of suppliers is low for the fully integrated steel plants as they have their own mine, eg, SAIL, Tata Steel. But for coking coal they largely depend on importers. Globally, the top three mining giants BHP Billiton, CVRD and Rio Tinto supply nearly two third of the processed iron ore and command very high bargaining power. In India, NMDC is a major supplier to standalone and non-integrated steel mills. Threat of Substitutes : Medium Plastics and composites pose a threat to Indian steel in one of its biggest markets - automotive manufacture. Similarly, aluminium has replaced steel to a great extent for applications, such as, door and window frame, beer cans and automobile engine. Bargaining Power of Consumers : Medium Some of the major steel consumption sectors, like automobiles, oil and gas, shipping, consumer durables and power generation enjoy high bargaining power and get favourable deals. INDIAN STEEL INDUSTRY : SWOT ANALYSIS SWOT analysis 9 of Indian steel industry helps in understanding strengths, weaknesses of the industry, as well as its various opportunities and threats. Strengths Availability of Raw Material India has abundance of iron ore, coal and many other raw materials required for iron and steel making. It has the fourth largest iron ore reserves (10.3 billion tonnes) after Russia,

Brazil, and Australia. Low Cost of Labour Indian steel industry has low unit labour cost which gets reflected in lower production cost of steel compared to many advanced countries. Quality Manpower It has third largest pool of technical manpower, next to USA and the erstwhile USSR, capable of understanding and assimilating new technologies. Mature Production Base Indian steel industry is more than 100 years old and boast of quality steel producers, eg, TATA Steel, SAIL, etc. Weaknesses Poor Quality of Raw Material Indigenous coking coal is high on ash content and is generally imported (Figure 7). Advantage of high iron content of indigenous ore is often neutralized by high basicity index. High Cost of Capital Interest payments in India are on average between 7% - 9% of the total costs as compared to 2.4% in Japan and 6.4% in USA. Low Labour Productivity In India the advantages of cheap labour gets neutralized by low labour productivity, eg, labour productivity of SAIL and TATA Steel is 215 t/man year and 277 t/man/year, whereas, for POSCO, Korea and NIPPON, Japan the values are 1345 t/man year and 980 t/man/year. Obsolete Technology Indian steel industry is far behind in terms of technology, compared to other global players.
25 20 15 10 5 0 2001-02 2001-02 2001-02 2001-02 2001-02 Figure 7 Coking coal import data, Mt Table 2 Comparison of input costs China Power Freight Finance US Cents/kWh US Cents/ t/ km Interest rate, % 4.50 0.96 6.00 India 9.0 1.6 10.0

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High Cost of Basic Inputs and Services High administered price of essential inputs like electricity, freight etc puts Indian steel industry at a disadvantage, eg, cost of electricity is three cents in the USA as compared to nine cents in India (Table 2). Added to these are ever increasing prices of coking and non-coking coal. Labour Laws Archaic Indian labour laws add to the woes of Indian steel industry. Higher Duties and Taxes Excise duties, sales tax, other direct and indirect taxes further push up costs of steel. Total taxes contribute more than 16% of total costs. Dependence on Imports for Steel Manufacturing Equipments and technology India highly depends on foreign countries for steel manufacturing equipments and technology which eventually results in rise in cost of production. Slow Statutory Clearances for Development of mines Slow clearances for Rowghat and Chiria mines of SAIL delayed their development. Quality Indian steel makers are still far behind global players, in terms of quality products. Slow Adaptability to Technological Change Indian steel industry is slow to adapt to latest technologies, due to various constraints including slow decision making.

Low investment in R and D Indias R and D expenditure is only 0.26% of turnover. Opportunities Increasing Demand of Steel in India Compared to other countries and global average (190.4 kg) per capita steel consumption is very low in India4 (44.3 kg). Figure 8 gives a glimpse of untapped potential of increasing steel consumption in India to reach the level of developing economies like China and CIS. Unexplored Rural Market The Indian rural sector, comprising 70% of countrys population, remains fairly unexposed to their multi-faceted use of steel. Presently per capita steel consumption in the rural sector is only 2kg. Enhancing applications in rural areas assumes a much greater significance now for increasing per capita consumption of steel. Positive Stimuli from Construction and Infrastructure Industry An increasing investment in infrastructure, construction and urbanisation as well as growth in automobile, white goods and industrial sector will provide a further boost to the optimism within the domestic steel industry. Figure 9 shows the amount of expenditure to be borne in improving infrastructure10. Power Addition of about 61 000 MW between 2007 and 2012 should drive steel off take northwards, leading to an incremental consumption of 0.4 million t/year during this period. Roads The government intends to embark on the construction of 48 new projects with a view to four lane about 10 000 km of roads. With steel consumption in the roads under construction being considerably higher in recent times, the outlook for increased steel consumption on this count appears to be brighter. Housing Low interest rates and easy availability of housing finance has resulted in housing boom. The Housing and Urban
200000 175000 150000 125000 100000 75000 50000 25000 0 194263 Outlay, Rs in crores

Peak point

Point of saturation

Point of Trigger inflection point

00 20 -0 6

Japan EU 15 Australia Singapore USA China India

0 100 200 300 400 500 600 700 800 Per capita, kg

72530 43560 3315 Civil aviation Ports 1000

Figure 8 Per capita steel consumption

Shipping Roads and Railways bridges Figure 9 Amount of expenditure in improving infrastructure

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Development Corporation intends to add two million houses every year, estimated to create an additional annual demand of 0.6 Mt to 0.8 Mt of steel. Malls From 25 malls in 2003, India expects to commission more than 600 malls by 2010 (100 million ft2). These malls are based on steel based composite construction where the steel consumption is much more compared to conventional RCC construction. Automobile and Ancillaries In 2004-05, Indias auto industry consumed about 2.8 Mt of steel (about 8% of Indias steel consumption). This is expected to grow at 11%-12% over the next three years. White Goods Rising income and the easy availability of low cost finance has started a white goods revolution in India, leading to an increased consumption of steel. Export Market Penetration It is estimated that world steel consumption will double in next 25 years. Quality improvement of Indian steel combined with its low cost advantages will definitely help in substantial gain in export market. Mergers and Acquisitions Mergers and acquisitions helps in capacity & technology augmentation. TATA Steel acquired CORUS in 2006 for $8 billon. Threats Threat of Substitutes Plastics, aluminium and composites pose a threat to Indian steel in one of its biggest markets, automotive manufacture. Steel has already been replaced in some large volume applications, namely, railway sleepers (RCC sleepers), large diameter water pipes (RCC pipes), small diameter pipes (PVC pipes), and domestic water tanks (PVC tanks). Technological Change Technological changes often force the industry structure to change. For a developing country like India where capital
Table 3 WEF rankings on select indicators of competitiveness Parameter Overall quality of infrastructure Sophistication of technology available Import fees Average tariff rates Ease of starting a new business Local development of product designs Efficient production processes Labour flexibility Pay related to productivity India 54 38 59 59 39 47 47 53 52 China 46 42 45 57 37 36 43 32 15

itself is costly, technological obsolescence is a major threat. Price Sensitivity and Demand Volatility The steel industry is characterized by cyclical fluctuations in prices of finished steel products as well as those of the key inputs. Any downward cyclical movement in the steel sector could affect the demand for steel and reduce profitability. China Net Exporter Chinas steel export in 2008 was 59.23 Mt. Export value increased by 43.8% year-on-year to $63.44 billion. Environmental Norms Stringent environmental norms will add to woes for Indian steel firms, if they fail to meet the statutory norms. ISPAT was forced to shut its blast furnace for six months for not meeting environmental norms. Global Economic Slowdown Global economic meltdown has resulted in lower production and lowering cost of steel. These eventually affected Indian steel industry and profits plummeted for Indian steel firms. Dumping by Competitors Indian steel industry is under threat of dumping of steel by Russian and Chinese mills. Protectionism from the West With the devaluation of currencies, the impact of the higher cost of funds could have been offset by developing countries. But America and the EU were quick to impose anti-dumping duties on imports from Brazil, Korea and Japan. For some products, even Indian producers were not spared. Systemic Deficiencies Poor quality of basic infrastructure like power, road, railways and port, etc. Limited access to good quality iron ores, normally earmarked for exports. Lacking in international competitiveness on determinants like on-time delivery, post sales service, distribution network, managerial initiatives, information technology, etc.

Korea 28 23 32 40 33 22 28 18 23

Malaysia 18 27 25 41 18 50 29 38 29

Indonesia 42 48 40 45 24 51 46 26 42

Taiwan 26 16 24 13 6 19 21 13 2

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Table 4 Category-wise competitiveness in manufacturing sector Category Percentage of value added 33 13 14 25 14 Percentage of capital employed 25 13 14 34 13 Percentage of labour employed 39 22 7 21 11 Competitiveness in the domestic market Medium-high High Medium-high Low-medium Low Competitiveness in the global market Low High Low-medium Low Low

Consumer centric Labour-skill intensive Naturally protected Capital/scale intensive Technology intensive

GLOBAL COMPETITIVENESS AND INDIAN STEEL INDUSTRY Steel industry is an integral part of manufacturing sector. Many parameters, which have a direct bearing on manufacturing sector, also significantly impact steel sector. Global competitiveness survey rankings, such as, those in the WEFs Global Competitiveness Report 11 provide corroborative results, which point towards significant lack of competitiveness, where India has been ranked 37th and 49th (out of 59 countries surveyed) in terms of current and growth competitiveness, respectively (Table 3). Table 4 illustrates that in both technology intensive and capital intensive sector Indias competitiveness is medium low12. Indias low index level, indicating major determinants of international competitiveness (Table 5) also points in the same direction13. However, these parameters represent
Table 5 Major determinants of international competitiveness Item Product quality Product design On-time delivery After sales service Unit India Brazil South Canada USA Japan Germany Korea Index Index Index Index 41 34 30 41 52 57 36 39 61 49 59 47 68 58 62 63 60 70 63 58 93 81 93 90 93 71 88 79

competitiveness of manufacturing sector in general which has a bearing on steel sector although not exactly reflective of steel industry. Worldsteel Dynamics has listed 17 factors, which has major influences on the long term competitiveness14 of an ISP (Table 6). Cost Competitiveness of Indian Steel Industry The competitiveness in steel industry is dependent on many factors, such as, state-of-the-art technology, availability and cost of inputs, infrastructure, manpower productivity, financial costs and exchange rates. The Indian steel industry needs to evaluate all these factors to be a low cost producer. World Steel Dynamics recently carried out a study on cost of steel production in various countries (Figure 10). India is having lower labour cost, but this is neutralized by low labour productivity. China is having the lowest labour cost. Energy cost and raw materials cost is also higher for India. At slab stage, HR and CR coils costs from India are lower than those of USA and Japan but higher than China, South Korea and the CIS countries. It is also to be noted that at each stage the cost differentials between South Korea and India widened. Superior technology used by a country like South Korea results in bringing down the costs in each downstream rolling stage. This is further confirmed that while the cost of conversion of liquid steel to slab in South Korea and India are quite comparable, at slab to HR coil stage the
1000 800

Distribution Index network

52

52

57 9291 47 68 1.63

66

74

72

76 600 38207 400 69 73 2.79 200 0 -200

Others Energy credit Raw material Labour Energy Depreciation and interest

Labour Ratio 6177 7724 productivity Training Index 36 61 37 61 0.38

30034 44070 4667 40 62 1.32 48 74 79 72

Managerial Index initiative

Expenses % 0.91 in R&D of GDP Information Index technology 44

2.66 2.85

52

59

63

57

82

87

Figure 10 Cost of production of crude steel (Source : World Steel Dynamics)

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Table 6 Major influences on the long term competitiveness of an ISP Factor (10 =best) Operating costs Ownership of low cost iron making and coke making coal Favourable location for procuring raw materials Skilled and productive workforce Price paid for electricity High quality and niche products Low legacy costs Ongoing cost cutting efforts Cost position of nearby competitors Owns downstream steel using business Domestic market growing at a high rate Proportion of sales in home market Degree of pricing power with large steel buyers Dominant in region Balance sheet Borrowed funds and equity on favourable basis Management experienced, aggressive, proactive Average score Bao Steel 8 3 Car Steel 6 China Steel 8 1 CSN 10 9 Dofasco 7 6 Gerdau 9 Nippon 6 1 Nucor 7 Posco 8 1 Severstal 10 9 Tata 9 10 Usinor 8 6

10

7 6 5 8 8 6 5 10

8 5 10 4 8 8 8 6

9 5 8 6 8 6 5 6

7 6 6 8 8 8 4 6

8 6 8 4 8 8 5 4

8 7 6 5 8 7 7 7

10 6 10 5 8 6 10 2

10 8 8 5 8 8 8 3

10 8 9 6 8 9 6 6

7 8 6 6 8 6 6 6

7 7 7 6 8 7 5 9

9 7 9 5 9 7 7 8

9 8

8 6

8 9

6 7

7 5

8 6

4 6

10 3

6 7

1 6

7 8

8 8

7 7 10

7 7 6

8 8 9

6 8 6

3 9 6

8 7 7

6 6 8

2 10 10

9 8 9

7 7 2

7 7 8

7 8

7.12

6.58

7.24

6.41

7.38

6.53

7.25

7.47

6.53

7.71

7.59

cost differential moves up by US $ 11/ t in favour of South Korea. The high conversion ratio of liquid steel into CR coil impacts the relative cost of production. Thus the ratio of liquid steel to CR ranges between 13% to 15% in USA, Japan and South Korea, while these are around 22% -23% in the cases of India and China. Individual unitwise, some plants in India are most cost competitive as compared to other countries. At slab, HR coil and CR coil stage, the cost of production at TISCO is the lowest followed by JVSL, SAIL BSL and Essar. It may also be mentioned here that while the cost of

conversion of liquid steel to slab is US $ 7 for Jindal, US $ 9 for Ispat, US $ 14 for TISCO, US $ 12 for Essar and US $ 23 for Bokaro, it is US $ 32 for USA, US $ 20 for South Korea and US $ 24 for China. As regards conversion of slab to HR Coil, while the Indian steel majors spent around US $ 37 to 50 / t, the cost varies from US $ 68 to 81 for USA, Germany, Japan, UK and France. TECHNO-ECONOMIC COMPETITIVENESS OF INDIAN STEEL INDUSTRY THROUGH BENCHMARKING Benchmarking requires those advanced or best practices in a specific area and/or process is identified and existing

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Table 7 Benchmarking of integrated steel plants Parameter Blast furnace, t/m3/d Sinter plant, t/m /h Coke rate, kg/thm Steel making, blows/yr/ working converter BOF lining life (no of heats) Cont casting, m/min Slab Billet Bloom Hot strip mill Mill utilization, % Yield from slab, % Cold rolling mill Mill utilization, % Yield, % Specific energy Consumption, Gcal/ tcs CO2 emission, kg/tcs Steel cleanliness, ppm (S, P, O, N) S P O N 10 - 100 50 - 200 10 - 50 30 - 60 5 - 100 10 - 150 5 - 40 10 - 40 56 - 64 92.7 - 94.3 6.45 - 8.5+ 90 95+ 4.5 - 5.5 70 - 78 96.3 - 97.6 85 - 90 98.5 1.0 - 1.9 3.0 - 3.5 0.5 - 0.9 1.4 - 2.5 3.0 - 4.7 0.5 - 1.0
2

Indian 1.3 - 2.2 1.2 - 1.5 450 to 610+ 4K - 4.5K 2K - 10K

International 2.5 - 3.5 >1.8 350 - 400 6K - 10K+ 5K - 10K+

energy consumption which is a major contributory factor for the high cost of steel and cut into its competitiveness. In addition, specific raw material consumption is also high (Table 8) which offsets our competitive advantage of domestic availability of iron ore. Therefore, in both technological and techno-economic front Indian steel industry need considerable improvement since Indian product quality index is also not high. This kind of quantum leap, ie, multi-dimensional efficiency and productivity gains is possible only when proper internal and external infrastructure for steel industry is in place. COST EFFICIENCY AND INNOVATION Cost efficiency and innovation goes hand in hand. In steel industry, 4 Ms are important, namely, man, machine, money, and minutes. Any innovation in these four factors results in cost reduction. In human resources, innovation is necessary to improve labour productivity. Improvement in technology and process results better techno-economic parameters and cost-effective production. Improvement in yield and productivity also helps in cost reduction. Cost Reduction Cost reduction is probably the most important driver for improving competitiveness. To ensure a competitive advantage, Indian steel makers have to concentrate on the following areas, such as, reduction in operating costs, reduction in working capital costs, introduction of new costeffective technologies, reduction in product inventory (unsold stock), improvement in techno-economic parameters, substitution of raw material, differentiated sourcing, effective supply chain management, reduction in social infrastructure costs, etc. Operating and working capital costs need to be brought down through a combination of benchmarking and strict cost control, potential for improvement in technoeconomic parameters, like energy consumption, yield etc need to be identified through benchmarking and implemented through in-house research and technological expertise. A major cost in steel manufacturing relates to the cost of raw material. There is a need to selectively focus on purchase of high-value items. This can be achieved through focusing on the total cost of ownership instead of just the purchase price and identifying critical levers that can be used to reduce the ultimate cost. Cost of raw material, like imported coal is to be analysed with respect to its productivity and for the optimum purchase pattern. Efforts should also be made to develop product specific and differentiated sourcing strategies instead of current practice of a single strategy for all purchases. Perhaps the greatest driver to cost reduction is through introduction of new cost effective technologies. One of the greatest technological breakthroughs in this direction is continuous casting. It has not only improved the quality of the cast product as opposed to ingot casting, but has also led to concurrent cost saving in terms of higher yield and low energy consumption. The other opportunities for cost reduction lie in reducing internal business costs like inventory holding, transportation and purchase processing costs. IE(I) JournalMM

2600 - 3300

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practices are compared against best practices. When there are gaps between the two, the best practices are, to the extent possible, adopted. Ensuring a financial turnaround would demand benchmarking of all critical operations. Benchmarking would help the steel industry in cost reduction and control starting from procurement to delivery stage. Table 7 shows, blast furnace productivity is low and total fuel rate is high for Indian steel industry. Steel industry also operates at a sub-optimal level with a relatively high rate of
Table 8 Raw material used up to hot metal stage, kg/thm Raw material Coking coal Injection coal Lump iron ore Ore fines Fluxes Total raw material Indian steel industry 952 43 646 882 183 2707 Nippon steel 545 169 280 1205 174 2373

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Plants should also identify on a continuous basis the measures to increase revenue by reducing freight costs, cost of arisings, demurrage and non-confirmed orders. The social infrastructure costs may also be looked into for its effectiveness and brought down in a phased manner. Innovation Research and development plays a pivotal role in making steel industry globally competitive. The driving forces are the need to produce new products to satisfy customer requirements, the need to reduce production costs by new production technology and the need for clean technology (including more recycling). New processes and technologies are needed to increase the potential for reducing raw materials use and reduce production costs and for improving quality. Research, development and demonstration play an important role in the creation of new technologies. Development of new technologies and processes and their successful application would enable the domestic industry to gain technological advantage which in turn will lead to competitive advantage. Innovation indeed leads to cost reduction through quality improvement, reduced labour cost, improved production process, reduced energy and material consumption, extended product range, etc. Figure 11 shows the relationship between competitive environment and technological innovation.

Infrastructure Major Factor of Competitiveness Any physical facility that aids in improving cost reduction, quality improvement, improved delivery / service and higher demand can be termed as infrastructure. Infrastructure can be divided into two parts, namely, external and internal. Figure 12 shows how internal or external infrastructure affects competitiveness. STRATEGIES FOR IMPROVING COMPETITIVENESS THROUGH COST EFFICIENCY AND INNOVATION The strategies to improve cost efficiency and innovations are keys to success of any manufacturing industry. This requires both short and long term steps through operational and strategic management. Operational management results in short term gain but sustainability it is brought through strategic business plans. Efficiency can be improved immediately by taking cost cutting measures in terms of process innovation whereas in long term, capacity expansion and technology management is needed to enhance efficiency. India on the Move : New Concepts and Technologies New concepts and technologies15 in iron making, steel making and downstream processing areas have emerged in recent times, leading to significant improvement in quality of final product and reduction in cost. India is emerging as a global player in the steel sector only after the plants have resorted to major technological upgradations. Raw Materials In India, raw materials consist of around 30% to 40 % of the cost of steel making. Consumption of raw materials is high in India compared to other global players as shown in Table 8. Improved ore beneficiation techniques will improve the quality of iron ores. Also to reduce cost, use of sinter and pellets should be increased in order to reduce use of lump ores, eg, Corus does not use lump ore at all. Usage of 10% lump ore with 70% - 80% sinter and 10% - 20% pellet is reported by Posco. Pre-treatment techniques, such as, selective crushing and pre-heating of coal charge improves M 10 and M 40 and increases oven throughput to produce a better quality of coke. Using pre-reduced ore fines, which are unsuitable for sinter making, as a raw material in the blast furnace is effective in increasing the blast furnace productivity and decreasing the reducing agents rate. Coke Making Improved coke quenching system, ie, use of dry quenching system in place of wet quenching helps in reducing moisture content of coke and improves its M10, CSR and CRI. It also facilitates power generation by recovering almost 80% of the sensible heat of hot coke. RINL is having dry coke quenching facility at coke ovens and SAIL is also coming up with the same facility in its modernization plan at IISCO. Coke stabilisation quenching (CSQ) is also a cost efficient technology, in which coke moisture comes down to 3% -

Cost curve having slow technological development High Production cost The difference in cost competitiveness due to innovation

Low Past (Low)

Cost curve having fast technological development Time (Intensity of competition) Future (High)

Figure 11 Relationship between competitive environment and innovative technology

Quality of finished steel (IF) Meeting the demand (EF) Material efficiency (IF) Energy efficiency (IF) Technology (IF) Cost to final customers Demand creation (EF)

Cost competitiveness

Landed cost of raw material (EF)

Cost effective inputs Workforce (IF) Shipment cost to market place (EF)

IF : Internal infrastructure; EF : External infrastructure

Figure 12 Effect of internal and external infrastructure on competitiveness

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Table 9 Technology improvement in sinter plant Technology Measures Effect Benefit

Table 11 Profitability on account of TRT BF size, m3 Up to 2000 4000 Top pro, atg 1.5 2.5 Power gen, MW million 5 14 Annual savings, US $ 4.4 US $ 12.2

Large sized sinter Higher undergrate 12% increase Economy of plants (>300m2) suction : 1400mm in production scale achieved with state-of-the - 1700mm WC for large sized -art technology sinter plants Taller bed height from 500 mm to 700 mm 4% increase Cost savings in in production production of due to less sinter : Rs 75/ t generation of sinter fines Increase in production:2% Decrease in coke rate

Integrated level-II process automation VVVF drives

Less specific power consumption : 2kWh/t Power Power saving generation of 0.22 kW/ t of sinter Lower stack Stack emission emission level up to 20mg/Nm3

Waste heat recovery from cooler Environmental and pollution control

Waste heat recovery boiler for power generation Use of ESP and bag filter

Use of bag filters Sustenance to Increased volatile matter plant and alkali content availability

3.5%. Partial briquetting of coal charge (PBCC) improves bulk density of coal charge by 40 kg/m3 to 50 kg/m3 and BF coke yield by almost 4%. Nippon Steel Oita Works is using dry cleaned and agglomerated pre-compaction system (DAPS) instead of wet charging of coal. Apart from reducing in energy consumption, DAPS increases oven throughput by 21% compared to conventional wet charging process and also increases use of non or weakly caking coal. Sinter Making Waste heat recovery system increases energy efficiency, by recovering waste heat from cooler. Bhilai Steel Plant (SAIL) and RINL have already installed this facility. Base blending of sinter mix allows uniform blend across the bed. VVVF drives in motors allow low specific power consumption. Table 9 shows how latest technologies, implemented at sinter plant results in cost benefit. Ignition furnace with multi - slit roof mounted burners improves the energy efficiency and reduces consumption of refractories in the furnace. Iron Making
Table 10 Profitability on account of PCI BF size, m3 Up to 2000 4000 PCI rate, kg/thm 120 180 HM production, t/day Up to 4500 Up to 9000 Annual savings US $ 15.7 million (Rs 76.0 cr) US $ 47.0 million (Rs 226.0 cr)

Phasing out of small capacity inefficient BFs with high capacity (4060m3) blast furnaces improves productivity and techno-economic parameters. Coal dust injection16 with oxygen enrichment reduces coke rate in furnace and in India almost every integrated steel plant is having this facility. 1 t of pulverised coal injection, ie, PCI (US $ 70/ t) can replace 900 kg of metallurgical coke (US $ 170/ t). Savings per tonne of PCI injected is US$83. In top pressure recovery turbine (TRT), pressure energy and thermal energy of the gas coming from top of the blast furnace is converted to mechanical energy so as to drive generator to recover the electricity, which is not only purify the coal gas, but also lowers the noise pollution. It also enhances indirect reduction and reduces coke rate. Bhilai Steel Plant (SAIL) is having top pressure recovery turbine. Table 10 and Table 11 show the profitability on account of PCI and TRT, respectively. Introduction of waste heat recovery system from hot blast stoves and VVVF drives improves the energy efficiency. For hot metal transportation, torpedo ladles can be used to save energy. Recent full-scale tests have shown that injecting natural gas into blast furnaces at the rate of 195.4 m3/t of hot metal can reduce coke consumption by 30%, and can increase iron-making capacity by 40%. Coal bed methane can be utilised through this process. Steelmaking and Casting In the conventional method of steel making17, removal of impurities from steel is carried out within a single vessel, such as, basic oxygen furnace (BOF). There is a limit to the extent of refining (ability to carry out oxidation and reduction) possible through a single process and this restricts the purity of steel. In recent years, various types of refining processes have been developed and added to steelmaking process, which have resulted in production of steels with superior cleanliness level and enhanced properties. The present steel refining practices adopted by the major steel producers involve two stage process, namely, pre-treatment of hot metal through desulphurisation and dephosphorisation units for production of low S(<0.005) and P(<0.015). After processing the steel through BOF, the liquid steel is further refined using ladle furnace (LF), vacuum arc degasser (VAD) and RH degasser etc depending on the requirements of quality. These secondary refining facilities are capable to restrict total impurities like gaseous content (O, N, H) to 50 ppm max. With inclusion content not exceeding 0.05%, Calcium treatment is also employed to control the morphology of sulphides thus enhancing crack arrestability of the steel. One of the greatest technological break-through in the area of steel making has been continuous casting, which offers great advantages in terms of yield, energy, cost saving and IE(I) JournalMM

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quality of cast product. With the recent development of thin slab casting, it became possible to extend the process continuity up to hot rolled strip stage. Thin slab casting reduces energy consumption by 30% and increases yield by 2%. The technology known as compact strip production (CSP) directly links a thin slab casting machine with a stateof-art rolling mill via a tunnel furnace. Liquid steel is cast in a thin slab mould and in less than half an hour it leaves the down coiler as hot rolled coil. Already such facility has been installed and operating at Ispat Industries. Hot Rolling New efficient and cost-competitive technologies that are coming up in hot rolling area include : Flexible Production Technology Schedule free hot rolling has been developed to meet diversifying user needs permitting small lot production of a wide variety of products. One major constraint associated with schedule free rolling is crown control. Introduction of six high mills (HC) and pair cross mills (PC) has helped to a great extent to obtain the required hot strip crown, irrespective of the time of rolling. Pair Cross Mill The first pair cross mill was introduced in 1991 at the plate mill of Nippon Steel18. This provides excellent crown and shape control and permits heavy draft rolling in passes resulting in a concurrent improvement of mechanical properties, such as, strength and toughness and mill productivity. Ferritic Rolling In todays modern hot strip mills, thinner gauges of hot strips up to 1.2 mm thickness can be produced. The problem of two-phase rolling has been overcome with the development of a new technology named ferritic rolling, in which finish rolling is carried out in ferrite region as opposed to austenitic region in conventional hot strip rolling. It has enabled production of ultra thin hot strips of 0.9 mm thickness and 1000 mm wide with excellent surface quality. Multipurpose Accelerated Cooling System (MACS) In order to produce a wide variety of as rolled and quench and tempered plates, online MACS was developed19 and put to use at Mizushima Works, Japan in mid 1980s for the production of thermo-mechanical controlled processed (TMBP) plates. With appropriate alloy design, it is possible to control the microstructure of the steel after finish rolling using MACS. It also eliminates requirement of off-line reheating and quenching facility. Relaxed Rolling Production of high strength steels with low temperature impact toughness guarantee necessitates lower carbon,

Table 12 Profitability associated with improvement in flat product hot rolling Technology Hot charging Profitability

technological

1. Energy saving 80-120 kcal/ t 2. Reduction in storage space 3. Product delivery time reduced by 90%

Endless/semi-endless rolling Schedule free rolling

1. Increase in yield - 0.5 to 1.0% 2. Increase in productivity - 20% 1. Larger heat size for caster 2. Increase in roll life by 40% 3. Increase in rolling length by 50%

Automatic width control Heat shields Profile control and flatness control Single roll drives in finishing trains

1. Better width tolerances 2. Increase in yield by 1.5 % 1. Around 14% saving in fuel consumption 1.Improved geometry and flatness 1. 30% reduction in roll force 2. 20% reduction in rolling torque 3. 40% reduction in gauge in last three stands

Edge masking

1. Reduction in yield losses due to trimming 2. Improved edge quality

increase in deformation per pass and lowering of finish rolling temperature (FRT: ~750C). A novel alloy design concept has been introduced which permits relaxed rolling regimes without affecting product properties. Studies carried out by Kozasu20 using a 0.08% C to 0.08% Nb steel demonstrated that it is possible to produce 20 mm thick plates with excellent strength-toughness combination even with high FRTs of 1000 C. Subsequently, steels with new alloy design concept involving high Nb (~0.1%) has been developed on industrial scale. Table 12 provides the profitability associated with different technological improvement in flat product hot rolling. Cold Rolling Mill Recent developments in cold rolling mill area shows that coupling of pickling line and tandem mill results in higher productivity, yield, etc. Rolling of thinner gauges of large width is possible by introduction of six hi rolling mills. Table 13 shows the improvement in quality and productivity by incorporating certain technologies in cold rolling area. Long Product Mill Table 14 and Table 15 show how cost efficiency can be achieved by incorporating various innovative technologies at wire and bar rod mill and section mill, respectively. Refractories 75% of the refractory produced in India is consumed by Indian

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Table 13 Technological improvement in cold rolling Technology Quality Profitability 1. Higher productivity 2. Better yield 3. Lower specific consumption of energy, rolls and consumables 4. Saving in space and crane operation

Table 14 Cost reduction in wire and bar rod mill Technology Quality Profitability

Coupling of pickling line Uniformity of and tandem mill product quality

On line quenching Increase in yield strength 1. Saving of Rs 270/t and tempering 150MPa -230 MPa 2. Costly alloying elements not required High speed discharge Better tolerance 1. Gain in productivity 50% -70% 2. Benefits - Rs 2600 to 3000/ t Increase in productivity by 50%

Laser welding

Better weld quality 1. No limitations on steel grades 2.Rollable welds higher yield 1.Lower construction cost 2.Lower acid consumption Good surface quality Effective strip cleaning Uniform coating along width as well as length Lower acid consumption Higher productivity Zinc saving up to Rs 1000/ t Additional product mix Flatness up to 2 IU Imparting roughness on strip for paintability Uniform coating of antirust oil for preservation Rolling of thinner gauges of large width Better shape control Better strip flatness and profile Higher roll life

Reducing and sizing mills

Consistent tolerance of 0.1

Shallow bath pickling

grades of steel today were not available a decade ago. Microstructural Engineering In the fifties and sixties strength levels of hot rolled steels were increased through addition of higher levels of carbon and manganese. Though this increased strength, it seriously affected the ductility, impact toughness and weldability properties. Quench and tempered (Q and T) steels involving alloy additions, such as, Ni, Cu, Cr, Mo, etc provides a viable alternative. Alloy addition imparted sufficient hardenability on quenching and desired strength-ductility-toughness properties on tempering. But Q and T steels suffer from higher cost and poor weldability properties. Introduction of microalloying and thermo-mechanical controlled processing (TMCP) resulted in generation of new class of high strength steels. Addition of microalloyed elements (MAE), such as, Nb, V, Ti and TMCP improved strength-toughness properties without affecting weldablility. In addition to the conventional ferrite-pearlite steels, a variety of non-equiaxed ferritic microstructures have been developed in low carbon and ultra
Table 15 Cost reduction in section mill Technology Quality Profitability

Turbulent pickling Electrolytic cleaning Air knife with auto lip gap control Inline galvanneal facility Inline tension levelling Dual size work roll with single drive Electrostatic oiling

Six Hi tandem rolling Roll shifting and contoured rolls Edge drop control Thermal crown control

Better strip edge quality Uniformity of gauge Higher roll life Housing less stands Consistent product 1. Higher mill utilisation quality 2. Reduced manpower Multi line rolling 1. Avoidance of post rolling heat treatment (savings Rs 975/ t to Rs 1105/ t) 2. Reduction of annealing time (savings Rs 325/t to Rs 520/ t) 1. Saving in energy 40%-50% 2. Reduction in conversion cost Rs 1350/ t to Rs 2250/ t Consistent product Saving of 68% in initial quality outlay compared to continuous and semi-continuous mills

steel industry. Use of monolithic lining, ie, castables instead of bricks in soaking pits increases life of refractory lining at least four times and also reduces by reducing heating time and gas consumption (Fuel saving : 33gcal/day). It can also be used in steel ladles, tundish, etc. Moreover, utilisation of used refractories in manufacturing Mg-C bricks will help in cost reduction. New Concepts and Innovations The need for steels with superior performance capability at lower cost has seen a steady increase over the last few decades. This has been met through continuous upgradation of steelmaking and rolling technology as well as introduction of new innovative concepts and products. A better understanding of physical metallurgy has helped in the design and development of new technological concepts as well as new materials with attractive properties. The fast pace of development can be understood from the fact that half the 20

Cast blooms and beam blanks

Tandem reversible mill group

Thermo-mechanical Homogeneity of Increase in mill rolling mechanical property productivity by 15% and increase in yield strength by 100 MPa to 150 MPa

IE(I) JournalMM

low carbon steels. This has led to the emergence of acicular ferritic and carbon bainitic (ULCB) steels used for manufacturing high strength linepipes and offshore structures. These steels, with low carbon and alloy content, fulfil high strength with excellent low temperature toughness and weldability properties. Recent development of interstitial free (IF) steel for auto segment completely eliminates cementite from microstructure of CR sheets and has made it amenable for press forming of complex shaped autobody components. Thermo-mechanically treated (TMT) rebars make use of tempered martensite at the rim, which provides strength and ferrite-pearlite at the core imparting adequate ductility, toughness and cold workability properties. Super Steel In spite of the technological advances made, India is far from exploiting the maximum benefit from iron based alloys. Most of todays ferrous materials are used at strength levels of about 10%-20% of the theoretical strength of iron. This means that there are ample scope of increasing of strength. The commercial application of steels with such high strength calls for adequate toughness levels, which can be achieved through generation of an extremely fine grain size (<1m). Development of super steel and ultra steel are being pursued by National Research Institute of Metals, Japan with the objective to develop a dream material of 21st century. A decrease in grain size from 10 m to 1 m lead to an increase in yield strength by about 340 MPa, while a decrease from 1m to 0.2 m leads to further increase by about 600 MPa. The development of super steel will be associated with dramatic changes in application of steels. Eiffel Tower as shown in Figure 13 constructed with most advanced technologies in 1889, is 300 m height. If todays high strength steel is used, a 750 m tall tower can be built. With super steel 1500 tall tower can be built with the same weight21. Super steel will lead to development of super-high-rise

buildings as well as other light engineering structures. Uninterrupted Supply of Raw Material For capacity expansion, to meet the ever increasing steel demand, Indian steel companies need to have uninterrupted supply of raw material to produce steel at a competitive price. As Indian steel industry is dependent mainly on imported coking coal, it should go for long term mining leases, to avoid price fluctuation. By having control over raw material certainly reduces cost, so battle for mines has gone global stretching from Chiria (SAIL) to Orissa (POSCO) to Bolivia (JSW). Adoption of Technologies to Avoid Dependence on Imported Coking Coal and Unavailability of High Grade Ores Indian steel industry faces potential availability constraints in high grade iron ore and coking coal inputs, as high grade iron ores are generally earmarked for exports and indigenous coals are having high ash content. Hence development of technological alternatives, such as, sponge iron instead of pig iron, which can be produced with low grade coal, the COREX process for pig iron manufacture, again using low grade coal, and the Romelt process which makes pig iron from even iron ore fines. POSCO is coming with FINEX technology, which does not require coking coal and lump iron ores. Implementation of dry cleaned and agglomerated pre-compaction system (DAPS) allows use of non or low coking coals. Pre-heating of coal before charging enables use of 25% non-coking coal in coal blend. Stamp-charging, in place of top-charging eliminates use of prime coking coal (eg, TATA Steel). Non-coking coal can also be used in Partial Briquetting of Coal Charge. Further, natural gas can be used in blast furnace, which reduces usage of coke by 30%. Automation Automation, done in right earnest has been proved to be highly productive and cost effective in steel industry across the world. In coke ovens, computer control operation of batteries including computerized firing control can be introduced. In repairing central portion of oven, hot repair robot can be used effectively, without disturbing oven operation. Automated PLC based controlled proportioning device22 is used for preparing coal blend of desired quality. Equipments, such as, on-line ash analyzer, on-line moisture meter allows precise control of blend in terms of ash and moisture, respectively. Automatic control of sinter plant in some developed countries, such as, Japan has taken place. For example, the appearance of burn raise point on sinter machine is set at some point, which indicates completion of sinter operation at the set point. Mathematical models and computer simulations are used to achieve more uniform circumferential distribution of ores in blast furnace. In BOF, control has improved tremendously through adoption of novel online sensor systems, namely, sub-lance system and mass spectrometer based off-gas analyzer. The sensor data are processed through several core models for end point control.

Figure 13 Construction of ultrahigh-rise Eiffel Tower with super steel

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Adoption of such control technique enabled carbon and temperature heat rate of over 95%. Automatic gauge and width control, on-line shape measurement, on-line inspection systems for defect detection etc helps in producing better quality product. IT Strategy The advantage of proper IT-based information system is that accurate information can be obtained at a much faster rate, reducing downtime and speeding up decision making process. Since time is more than money, it would have direct impact on cost. IT applications will help in streamlining both process chain and supply chain and would thereby result in cost reduction and increase in productivity by reducing cycle time (production to sales), improving cash flow, offering faster information, savings in inventory carrying costs, reducing communication costs, responding swiftly to market changes, integrating enterprise, facilitating better designed products and services, reducing manual effort in data compilation and analysis, etc. The overall emphasis should be to align with global trend of e-commerce in steel as early as possible. Indian steel industry is unable to take advantage of IT in order to attract global customers. IT communication network can be strengthened by computerization of production, planning and control (PPC) and implementation of enterprise resource planning (ERP) and manufacturing execution system (MES) to avail the benefit of transparency in negotiations and purchasing at best available market price. The advantages of implementation of ERP are instantaneous updating of information, elimination of duplication of data, less time in feeding data, fewer errors due to redundancy or loss of integrity of data and optimising production scheduling at the enterprise level. An example of benefit derived through implementation of IT is e-auction. Since July 2000, 100% of scraps, defectives and over-rolls generated by Indian steel plants are being sold through e-auction. This innovative technique as shown in the Figure 14, resulted in cost efficiency by 2.5% -7%. Quality Assurance In steel industry, consumers are demanding better quality and improved products. Although the industry has greatly

Minimise input cost :

Better process

Overall quality improvement Higher operational efficiency/ better service

Machine hours Materials consumed Energy spent Money spent Overhead expenses

Maximise return : Volume Profit Turnover Market share

Figure 15 Quality and profitability inter-relationship

improved its competitive position in the past decade, it still faces tremendous challenges to maintain or increase its share in the evolving markets of this country and the world in context with quality products. Inspection and quality assurance plays a vital role in todays globalized trade atmosphere. With the increase in global trade, the product and commercial transactions have become more complex. Measures have taken for quality assurance and fast inspection by deploying automatic systems so that material availability in the market is not restricted by quality checks. The quality and recurring problems can be addressed by formation of quality circles and six-sigma teams. They bring in innovation and suggestions in operations of the process. Steel plants of India is implementing six-sigma to enhance the quality of product and reduce the amount of rejection, which eventually enhances cost-efficiency of a steel company. Figure 15 shows how overall quality improvement affects profitability and cost efficiency. Value Addition in Product-mix The industry should change its product mix with more importance given to value added products (like automobile grade galvanized steel) so that a shift is made from being classed as a commodity to being a branded product. The industry should try to integrate itself with the end user, ie, customer gained importance. India has the capability to produce a variety of grades of steel and that too, of international quality standards. As per the ratings of the World Steel Dynamics, Indian HR products are classified in the Tier-II category quality products - a major reason behind their acceptance in the world market. EU, Japan has qualified for the top slot, while countries like South Korea, USA share the same class as India. India in order to become globally competitive has to increase its quality to Tier-I status and should have the right blend of product mix so that it can create a niche in the global market for its products. Essars share of value-added grade steel has gone up to 48% from 37% last year. Close to 40% of JSWs production is value added steel. SAIL has plans to increase volume of value added steels to 50% of its saleable steel production by 2009 -2010. Environment Friendly Technologies

Reduction in cycle time

e-auctions result in significant reduction in process time for price negotiation and contract finalization.

Cost efficiency through e-auction (2.5%-7.0%

Inventory planning and disposal Lower marketing infrastructure

Not only can stock lots be efficiently sold but capacity auctioning can bring a lot of benefits.

Automation of process leads to reduction in manpower

Figure 14 Cost efficiency through e-auction

The era of industrial deregulation is being replaced by an era of environmental regulation. The steel industry accounts

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for between 5% and 6% of total man-made CO2 emissions. It has been seen that policies applied only in the Kyoto countries are not working in terms of making any reduction in total greenhouse gas emissions. Re-cycling of steel is one way for generation of revenue and cost reduction. Steel plants need to apply the best available environment friendly technology everywhere to be cost-efficient in future too. The steel plants not adhering to the environmental norms may get closed. For example, using stamp-charging in coke ovens reduces coke dust generation. Strip caster is far more energy efficient and emits less GHG in the atmosphere than conventional thick slab caster. Electrostatic precipitators, bag filters, etc should be used. Whilst many steel plants are close to the limits of what can be achieved with present technology, there are many steel plants where energy efficiency and CO2 emissions fall far below the global best. Therefore, those plants need to be closed or replaced. Steel has a major role in the light-weighting of vehicles. With recent developments in ultra-high strength steels, steel provides a much more energy efficient solution than, for instance, aluminium. The recycling of end-of-life steel is needed to maximize. Steel is already the most recycled material in the world without government subsidies or intervention. Every ton of steel re-applied makes a big saving in net CO2 emissions. Lastly and most importantly, as an industry steel maker shall take the responsibility to undertake longer-term research on new technologies, to radically reduce CO2 footprint. Maintenance Practices : Key to Zero Defects In maintenance practices, the concept of zero defects has been felt necessary for improving overall efficiency. Availability of equipment is very important for production of quality products at low cost. The maintenances are done on predictive and condition based. The predictive maintenance tools, such as, thermal imaging, mathematical modelling, etc are helpful in reducing cost and efficiency of the plant and various linkages in the process are not disturbed. Setting up an effective maintenance program using condition based monitoring system (CBMS) boosts the productivity of plant equipment by increasing its availability through avoiding unplanned shutdowns and decreasing the time needed to make repairs. An effective condition monitoring programme

(Figure 16) is a systematic diagnostic approach consisting of detection, analysis and correction. Basic purpose of CBMS is to know the deteriorating condition of machine components well in advance of breakdown for proactive maintenance. Common techniques for condition monitoring are vibration analysis, shock pulse measurement analysis, wear debris analysis and thermography. Strengthening Research and Development Indias expenditure on R & D was only 0.26% of turnover in the year 2004 as against 3% - 4% in developed countries such as, Japan, UK, and USA, etc. It is therefore suggested that the government should incentivize technology development which will further facilitate R & D initiatives. This will in turn enhance the competitiveness of the Indian steel industry. Expenditure on R & D by steel plants should be increased. With a strong R & D base, organisations will be able to assimilate the technology faster. R & D should focus on introduction of new products according to change in market need, based on indigenous R & D in premium segment, continual improvement through process innovation and strategic improvement to reduce cost of operations and reduction in price of products. Keeping cost competitiveness as its foremost objective, R & D unit should focus on Optimisation of process technologies for maximisation of productivity at minimum cost (for example, through simulation models and data-base management) Recommendation of remedial measures for cost saving through energy conservation, elimination of low value steps of operation Intense focus on product development activities, specifically developing difficult-to-make and high value steel grades to meet global challenges with continuously modified strategies, Improvement in physico-chemical properties of raw materials, Improvement in productivity and yield of coke ovens, blast furnace, BOF and mills, Improvement in quality of product, Cost effective environment friendly technologies. Hence focus shall be given to innovative ideas and research and development activities by the steel makers. Innovative ideas, not only from people directly engaged in R and D activities, but also from other employees, eg, those involved operation, maintenance, etc should be encouraged. Restructuring HR Policy The success of the plans to substantially raise production, master sophisticated technology and introduce large scale

General equipment data Inspection Inspection schedule

Identifying defects Priorities Defects not repaired or repair deferred Data base Management information and reports

Defects repaired Reinspection

Figure 16 Condition based maintenance system

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automation and achieve market leadership would depend upon effective human endeavour. Competitive superiority of the industry could result from relative superiority in knowledge, skills and resources that business can deploy. To this extent, it would be the competence of manpower that would ultimately give the industry the competitive edge. Low labour productivity is detrimental to Indian steel industry, as it raises cost of production. Optimum utilisation of human resources should be done to achieve cost competitiveness. Training and re-training with updated inputs should be a continuous process in steel plants. Training programmes should be designed for people from different hierarchy including top level management. One of the major innovative HR practices is the use of work teams with multi-skill training and responsibility. In particular, the use of production workers for routine maintenance reduces the need for specialized maintenance workers, who are often underutilized. The use of multi-skilled workers and fewer job classifications is critical to a high performance workplace in the steel industry. Innovative Marketing Strategy Focused marketing with the help of differentiation strategy is the only way by which steel makers can outpace competition in todays business scenario. Focused marketing means harmonizing all elements of the marketing mix, product, price, place, pace and people to their advantage. While it will be necessary to offer high quality of product in terms of adherence to specifications, it will also be necessary to adhere to extend competitive offer in terms of commercial terms, packaging, performance guarantee and services. These services could either be in terms of adding value to the offered product like slitting of coils, side shearing, etc and also in terms of providing pre and post sales service like offering information about the status of orders, fast redressal of claims, updating technical know-how and suggesting better application of existing products. Customers should be given utmost priority. Marketing division should also look out for unexplored markets. To reach those markets, companies should also have a large base of dealers. Innovations in the market place, such as, the CVM (customerccalue nanagement), Retail Value Management and the first organized steel retail store in India-Steel Junction have presented TATA Steel to the customers in a much better manner. Creating Brand Value It has started playing an important role in the steel business. Not only does branding enhance customer acceptance and loyalty, it also allows steel companies to charge a premium. Accordingly, companies like Tata Steel, SAIL, Essar, JSW, Jindal Stainless are increasingly focusing on branding steel. For Tata Steel, branded products accounted for 25% share in flat products and 31% share in long products, sales during H1 FY2005 (against 21% and 30%, respectively in H1 FY2004). TATA TISCON, TATA PIPES, TATA AGRICO, TATA SHAKTI are some of the brands23 from TATA Steel. SAIL is 24

having SAILJYOTI for GP/GC plates/sheets, SAIL-TMT rebars for construction, SAILCOR for wagon and coaches, SAILMA for earthmovers and bridges, SAIL-HITEN for ATM machines, SAIL KAVACH for bullet-proof jackets. Innovative advertisements also add to brand value. SAIL came up with the slogan there is little bit of SAIL in everybodys life, TATA Steel with we also make steel and Essar Steel with the 24 carat steel tagline. Creation of Infrastructure to Sustain Further Growth in Production In 2005-06, JSW commissioned a 100 MW captive power plant in Vijayanagar, which helped reduce power costs by nearly 25%. Earlier it used to buy the power from outside and paid Rs 2.60/unit. But now, this cost was reduced to Rs 2/unit. This will result in a benefit of close to Rs 100 crore. Bhushan Steel has captive power plants in Khopoli and will set-up a 2000 MW thermal power plant in Orissa. Essar Steel has power supply agreements with Essar Power and Bhander Power. SAIL is already having dedicated power plants. Further, JSW, which was dependent on the Goa port earlier, has set up a dedicated jetty. Freight costs have come down due to this. The company paid Rs 5.5 million demurrage (charges levied if a vessel is berthed beyond the time allowed or agreed upon) in 2004-05. In 2005-06, it did not pay any. Indian companies are also engaged in backward integration to mitigate risks. For instance, Bhushan Steel and Strips buy hot-rolled steel and converts them to high-end cold rolled and galvanised steel for auto and white good application. Today, it is setting up a 3Mt steel making and hot rolling facility in Orissa. Consolidation in the Form of Mergers and Acquisitions Active mergers and acquisitions (M and As) among players are indicative of the consolidation dynamics within the steel industry globally. In doing so steelmakers are pursuing two main objectives by purchasing additional production capacity they are aiming to both improve their cost structure and increase their market clout. The privately owned UK Dutch Company LNM Holdings (Ispat) experienced the fastest growth through its strategy of consolidation in Eastern Europe. Consolidation enables companies to control the price of steel by controlling the supply. As for examples Mittal Steels acquisition of its rival ARCELOR and TATA Steels acquisition of CORUS, the second largest steel producer in Europe. A company can be a good strategic fit for merger if it has, among other things, attractive access to raw materials, production capabilities, proven success in complementary markets, new technologies or patented products and a successful global supply network. Also India has taken a step in this direction by forming an Indian Steel Alliance of five private players, namely, SAIL, Essar Steel, Tisco, Ispat Industries and Jindal Steel. The alliance objective is to promote domestic consumption of steel, take up common export efforts, fight protectionism in IE(I) JournalMM

importing countries and make representations to the government about policies to support steel industry. But most of the Indian manufacturers are significantly small in size in relation to their global counterparts and hence consolidation has almost been absent on account of financial distress of most of the companies, leaving them with limited free cash and reluctance of investors to find such deals. To facilitate consolidation a strategy in which banks and financial institutions are involved to provide loans at lower interest rates should be devised and International players should be asked to form marketing alliances with Indian companies. As different major global steel producers like Arcelor-mittal, Posco and others are setting up plants in India, competition in the future will increase. In that case several midsize domestic companies may go for mergers. Financial Restructuring of Companies With the lowering of interest rates most steel companies can restructure their high interest rate debt to lower debt. Restructuring of high cost debt is estimated to increase their competitiveness in the global markets with better ability to manage the cyclicality of the industry. The recent upturn in the sector enabled many companies to pay off their long term debts early and, in general, interest payments have also come down. Essar Steel, for instance, has come out of the purview of CDR (corporate debt restructuring) by repaying its entire CDR debt of Rs 28 000 million. In the process, it has brought down the average interest cost from 11.6% to 9% per annum. Mukand has pumped in funds from the sale of land it owned in Kurla, thereby reducing bank borrowings. And Bhushan Steel has paid off a lot of its high cost debt. There is thus a need to religiously monitor important parameters like sales, gross margins, interest and depreciation, profit after tax, net worth, total debt and debt equity ratio. The key feature of a financial restructuring would be Restructuring of asset values by writing down to the extent of interest capitalised. Writing off loans and interests to the extent possible. Restructuring of capital and liabilities through reduction of debts by financial institutions, to the extent possible. Reduction in plant inventory through just-in-time procurement. Strategic partnership in non-core businesses. Outsourcing of non-core services. Financial restructuring will have a positive impact on the profitability of the company through reduction of interest and depreciation charges as well as efficient deployment of capital. Development of Logistics

As Indian steel producers gear up for augmenting their capacity and produce steel more cost efficiently, various inputs at competitive prices are required for steel making like coal, power, fuel and oil. Although India has huge iron ore reserves, development and exploitation of iron ore reserve would require huge infrastructural resources like roads and railway linkages with mine locations. Higher import of coking coal would involve development of ports, better transportation infrastructure to and from ports. The efficiency of Indian ports is affected by low productivity, high costs, long vessel turnaround times, and lengthy customs delays. Shipment from India to the USA costs 20% more than Thailand and 35% more than from China. Expanding Indias steel sector depends on lower port costs for handling key inputs, such as, coking coal which is predominantly imported, as well as servicing potential steel exports. Transportation system in India has been a bottleneck to Indian steel industry. Indian Railways, which account for 35% of the transportation of finished steel charges high freight cost and demurrage charges. These charges should be lowered in order to make Indian steel industry more competitive. Freight movement through road are delayed due to multiple check points. Onerous transport regulations should be modified. Government Policies To improve competitiveness of Indian steel industry, Joint Policy Committee (JPC) recommended several measures. Customs duty on certain critical inputs, not available indigenously, should be reduced. Excise duty deferment on capital goods and reduction in the stamp duty on financing steel project, has also been suggested. The government should give reasonable levels of protection to the domestic steel industry by enforcing anti-dumping duty by other countries. Relaxation of labour laws, so that public sector companies can increase the labour productivity by the rationalization of manpower through cutting down of total employee strength, should also be done. Mass Awareness and Distribution Centers Mass awareness needs to be launched for greater consumption of steel in both rural and urban lives. Private district level distribution centres and involvement of grass root non-governmental organisation (NGO) can play a major role in enhancing the per capita consumption of steel in rural India, which would fuel growth of steel sector and will make it more cost competitive. MANAGING TECHNOLOGY : THE SAIL WAY It is widely accepted that innovative technologies have a direct bearing on todays complex and uncertain iron and steel industry. The real essence of technology management of a company lies not only in careful development of competency in individual stages of activity but in understanding and managing the linkages at each stage that

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will result in profitability and competitiveness. R and D centre for iron and steel (RDCIS), the corporate R and D unit of Steel Authority of India (SAIL), the largest steel maker in India, by virtue of its experience and competence, has been effectively coordinating and guiding this linkage for development of inter and intra areas of excellence in SAIL plants. Operational vis-a-vis Strategic Management Judicious balance between operational and strategic management of technology has always been a cornerstone in the approach of RDCIS in bringing about technological competitiveness in SAIL. Operational management has primarily focused on improving current levels of efficiency and output in incremental measures. Strategic management on the other hand has been addressing the technological needs for ensuring added edge to the competitiveness of the company, by probing and keeping future market-product linkage in perspective. Strategic technology management, therefore, has involved quantum jump in technology status, continually reducing the cost of production while improving product quality. The companys competitive edge depends largely on how effectively strategic technology shifts are managed and nurtured internally while encouraging operational technological improvements. Development of frontline technologies and careful assessment of strategic technological requirements is a very involved process. This not only requires adequate expertise, but also knowledge regarding futuristic technological developments and proper analytical skill to assess their usability and appropriateness in our context. RDCIS has provided guidance to SAIL in implementation of strategic technologies. A few examples of strategic shifts in technology will be elaborated subsequently. Towards meeting future challenges and goals of SAIL, RDCIS has been coordinating inputs pertaining to process modelling/simulation and providing smart automation solutions, which has helped both for operational as well as strategic improvement in SAIL plants. SALIENT R & D INNOVATIONS IN SAIL RDCIS has been instrumental in ushering in operational improvements and bringing about strategic interventions in different units of SAIL with concurrent technological advancements and benefits. Some of the important areas where ingenious applications of R & D innovations have taken place, have been elucidated here. The innovations described are in place in various SAIL units, namely, Rourkela Steel Plant (RSP), Bhilai Steel Plant (BSP), Bokaro Steel Limited (BSL), Durgapur Steel Plant (DSP), IISCO Steel Plant (ISP) and in Dalli Mines under BSP. Operational Improvements Lining Life Improvement (RSP, BSP)
R1

SWM 9%C

SWM 7%C

. . . . . . . . . . . . . . . . .

FM + SWM 9%C

FM + SWM 8%C FM + SWM 7%C

AMC

Figure 17 Existing and modified lining pattern in 150t steel ladle at SMS-II, RSP

in steel plant. Higher lining life is required for consistent maintenance of fleet of ladles for uninterrupted production of steel. This enhances availability of vessels and reduces overall specific consumption of refractories. Steel Ladle at SMS-II, RSP With an aim to enhance the average lining life (89 heats) of 150 t steel ladles, an in-depth study on the wear profiles of ladle was made. New bricks were developed for the weakest lining areas. For the first time in SAIL resin bonded alumina magnesia carbon (AMC) brick for bottom impact pad, and improved bricks with 98% MgO containing fused magnesia mixed with 97% MgO sea water magnesia in the ratio of 1:1 for the metal zone were developed and used. Lining design was modified (Figure 17) using the above bricks and trials were conducted resulting in a highest-ever lining life of 129 heats in SAIL plants with average of 122 against shop average of 89 heats. Reduction in Specific Roll Consumption at Hot Strip Mill (HSM), BSL In a typical hot rolling mill, the roll change may consume as

R2

R3

R4

R5

Steel ladles are one of the major consumers of refractories

Figure 18 Modified roll cooling header location in HSM, BSL

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much as 10% of available production time. The work rolls are changed regularly to maintain proper quality of rolled strips. It is, however, at the cost of loss in production and lower life of rolls. Efforts were, therefore, made to reduce the frequency of roll change by reducing the roll wear. This also decreases production cost by reducing the specific roll consumption. Cooling in Roughing Stand, HSM Roll cooling system of roughing stands of HSM, BSL not being properly designed was adversely affecting the roll life of the mill. Arrangement of modified roll cooling headers in stands (R1 to R5) is shown in Figure 18. An effective roll cooling system was designed with introduction of flat jet nozzle for uniform distribution across spray width and higher heat transfer rate, relocation of cooling headers for improved heat transfer co-efficient from roll surface soon after roll-bite, intense cooling of exit work roll for arresting heat wave penetration and faster heat removal rate, etc. Improved roll cooling system was designed and introduced in the first two roughing stands (R1 and R2) of HSM, BSL. It has resulted in substantial improvement in roll life. Roll-bite Lubrication in Finishing Stand Application of RBL in the hot strip mill resulted in an appreciable reduction in wear rate of work rolls. Schematic diagram of RBL is given in Figure 19. It enabled increase in campaign length of rolling by minimum 10% from average 101 km (Feb-Jul 08) to 112 km (Aug 08-March 09). Besides, there had been decrease in grinding off-take of rolls of F6-F-8 stands by 0.18 mm (from average 0.60 mm to 0.42 mm), which could be translated into saving of over 2 rolls / month.

RBL has also helped in suppressing the generation of rolledin-scale defect in HR coils. The system was also found to be advantageous in reducing roll force and power consumption by 5% -10% facilitating ease of rolling of high strength special steels, namely, high strength LPG steel (SG 295 and P 310 grades), which could be rolled for the first time in the hot strip mill in thinner gauge of 2.2 mm. RBL had also helped in suppressing the generation of rolled-in-scale in the HR coil. Strategic Interventions Development of Earthquake Resistant (EQR) TMT Rebars To meet future needs of the construction sector in seismic prone areas, new varieties of high strength rebars with superior seismic resistance capabilities have been developed for the first time in the country. These rebars have been developed both in Fe-500 grades in two categories, namely, plain (SAIL EQR) and corrosion resistant (SAIL HCR EQR) to meet the diverse needs of construction sector in mildcorrosive and highly corrosive regions. These rebars are characterized by high uniform and total elongation, high UTS/ YS ratio, low variation in yield strength, respectively (Table 16). The microstructure of SAIL EQR rebars comprised of a thin tempered martensite rim and ferrite + pearlite/ bainite core. Based on extensive trials, it was established for Fe-500 grade rebars a volume fraction of 18% - 22% tempered martensite
800
Yield strength, MPa

600 400 Y= 7.3897 357.6 200 0 0 20 40 Volume fraction of tempered martensite, % 60

R2 = 0.9636

Figure 20 Influence of tempered martensite on YS

(1) Tank, (2) Flow meter, (3) Calibration cylinder, (4) Pump-motor, (5) Mixer, (6) Segmented headers, (7) Mill stand, (8) Oil lines, (9) Water lines, (10) Control signal, (11) Control panel/PLC Figure 19 Schematic diagram of RBL system Table 16 Specified mechanical properties of EQR bars Parameter YS min, N/mm2 YS max, N/mm2 UTS/YS ratio, min Total elongation, min % SAIL EQR 500 625 1.18 18.0

is required to meet the requirement of yield strength and UTS/YS ratio (Figure 20). These rebars were extensively evaluated for their seismic resistance behaviour under monotonic and quassi-static cyclic loading conditions at Earthquake Engineering Department, IIT Roorkee and satisfied all the stipulated requirements. Commercial production and dispatch of more than 7 50 000 t of these grades of rebars during 2008-09 was achieved across the country for RCC construction. In view of the value addition and good demand for this product, Chairman, SAIL has directed all the steel units to convert their entire TMT rebar production into EQR TMT rebar. Development of Continuous Casting Technology for Production of CRNO Steels Rourkela Steel Plant (RSP), SAIL has been the prime

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100000
Production/year, t

and management.
80698 t

77006 t 67443 t 54928 t

76428 t

For the Indian steel industry to be competitive, technological innovations are vital. For running a steel plant, the approach has to be such that a delicate balance is struck between introducing operational improvements and at the same time planning for strategic technology shifts. All in all, in order for the steel industry to become globally competitive, it is important that strategies have to be made so that bottlenecks in the growth of this sector are removed and the companies are more responsive to change. Those that respond without delay will be the success stories of the future. ACKNOWLEDGEMENT Authors are grateful to the colleagues of SAIL for sharing their thoughts for the problems and various strategies/ solutions for improving competitiveness of Indian steel industry through cost efficiency and innovation. Authors are highly obliged to the management of RDCIS for their valuable support extended to them in bringing this paper. REFERENCES
1. World Steel Production Data. IISI 2007-08 2. World Steel Production Data. IISI 2008-09 3. Steel Market Scenario. Steel Tech, vol 3, no 4, July 2009. 4. www.worldsteel.org 5. http://steel.nic.in 6. Steel World 7. SAIL News, November-December 2006. 8. Competitive Strategy : Techniques for Analyzing Industries and Competitors. Michael Porter, 1980 9. National Steel Policy, 2005 10. Planningcommission.gov.in 11. World Economic Forum.

10000 2004-05 2005-06 2006-07 2007-08 2008-09 Figure 21 Production data of CRNO steels

producer of different grades of CRNO steels (M27 to M47 graded on the basis of core loss value in terms of W/kg) in the country with nominal thickness of 0.50 mm and 0.65 mm. Though CRNO electrical steel was and is a prestigious product of RSP, it was produced through the ingot route with low process yield of 48% till 2003-04. Generally, these grades are difficult to be continuously cast because of high silicon and low carbon contents. RDCIS had taken the challenge of developing the technology for producing CRNO steels through the continuous cast (CC) route. This was even discouraged by the original suppliers of the process technology and was acting as a hindrance to RSP for converting itself into a 100% CC producer. Casting technology was formulated based on fundamental understanding of the solidification process and implemented for M36 to M47 grade. Careful control of chemistry to ensure balance between ferrite and austenite casting and several process innovations, such as, intensification of secondary cooling, choice of suitable mould powder, warm charging of slabs, etc were implemented. This resulted in increasing the process yield to 75% from 48% earlier, besides facilitating 100% changeover from ingot to CC route and elimination of soaking pit and slabbing mill. The production of CRNO has risen significantly over the years, 54928 t in 2004-05 to 80698 t in 2007-08 (Figure 21). From these examples, it can be seen how innovations in process technology and product development resulted in making the largest steel producer of the country, SAIL, even more cost competitive and technologically enhanced to face other global giants. Similarly, other steel plants of India should focus on innovation to reduce cost of production and become technologically more competitive. CONCLUSION The growth of the steel sector is intricately linked with the growth of the Indian economy and especially the growth of the steel consuming sectors. Production and production capacities should be increased through expansion and installation of new plants using secondary steel making routes that are more cost effective and quality conscious. At the same time, productivity of our steel plants must be maintained at levels close to international standards. Indian steel industry must try to derive benefit from enormous economies of scale in production, distribution, marketing

12. Assessment of Indian Manufacturing Competitiveness. Accenture Report. 13. Steel and Metallurgy. 14. www.worldsteeldynamics.com 15. K Krishnamurthy. Technology Transfer : Indias Iron and Steel. Technology Books, Madras, India, 1987. 16. R Jaffarullah and B K Ghosh. Alternate Fuels in Blast Furnaces to Reduce Coke Consumption. Journal of The Institution of Engineers (India), vol 86, pt MM/1, April 2005, p 16. 17. Selection of Appropriate Steelmaking and Casting Technologies for Cost Effective Steel Production. Steelworld, September 2008. 18. Kiyoshi Nishioka, et al. Nippon Steel Tech, Report no 75, 1997, p 9. 19. F Sudo and T Fuji. Kawasaki Steel Tech, Report no 44, 2001, p 3. 20. I Kozasu, C Ouchi, T Sampei and T Okita. Proceedings of Microalloying75, Union Carbide Corporation, New York, 1977, p 120. 21. IISI : Superhigh-rise Eiffel Tower. IISI Environment Report, 1998. 22. Automation India. 23. Building Brands of Steel. Hindu Business Line, New Delhi, August 31, 2006.

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