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Role of EPC Contractor in Growth of Steel Industry

Achievements & Unfinished Agenda

By :

Mr. D.M.ShahVice President & Head Minerals and Metals Business UnitLarsen & Toubro Ltd.

ASSOCHAM

60.0

110.0

160.0

58.057.055.0

53.144.0

38.126.214.3

9.45.11.61.1

0

20

40

60

80

100

120

140

160

180

1950 1960 1970 1980 1990 2000 2005 2006 2007 2008 2009 2010 2015 2020

Ste

el

pro

du

cti

on

, M

t

Growth of Indian Steel Industry

Exponential Growth

Controlled Regime

Decontrol

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Steel Capacity in India

Present Capacity – 63 MTPA

Growth Rate – 7.5% CAGR (2000 -10) Apprx.

Projected Growth Rate- 10% CAGR Apprx.

By 2015 India Second Largest Steel Producer

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Major Steel Expansion Projects / New Projects

Steel Authority of India LimitedTata SteelRINLBhushan GroupJindal GroupEssar SteelNMDCPOSCOArcelor Mittal

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PSU Present Projects – Mode of Execution

SAIL /RINL–Presently Undertaking Complete Iron making Area under EPC Route Material Handling Beneficiation Pellet Plant Sinter Plant Blast Furnace Coke Oven

Successful completion of EPC Packages clearly demonstrate the choice of packaging

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PSU Present Projects – Mode of Execution

NMDC –Following Packages Envisaged thro EPC Route Material Handling Beneficiation Sinter Plant Blast Furnace Coke Oven Steel Melting Shop Rolling Mill

Complete Steel Plant under EPC Route - Emerging Scenario of Project Execution

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Private Producers – Mode of ExecutionTata Steel/ Bhushan Steel – Packages under

EPC Mode Material Handling Beneficiation Pellet Plant Sinter Plant Blast Furnace Coke Oven

Clear and Evident Advantages Observed

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Emergence of EPC Companies

Traditional Steel Plant Engineering Agencies

Pre 1990’s

Strong Construction & Execution Parties

Large Manufacturing & Fabrication Units

Huge Time and Cost Overrun Observed

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Emergence of EPC Companies

Domestic / International Engineering & Procurement Parties

Post 1990’s

Construction & Erection Agencies

Emergence Full or Part EPC Companies

Relative Improvement of Project Deliveries

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Achievement - EPC Concept

Dominant Role of EPC Players in Iron Making

2008 to Present and Beyond

Very Significant reduction of Project Schedules and Quick Achievement of Plant Performances

Increased Awareness of Customer and Graduation of Major Players into EPC

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Reasons of Increasing Trend towards EPC

Committed Delivery - Single Point Responsibility Superior and Optimized Engineering Solutions Reduced Interface between multiple agencies Shortened Schedule /Savings on Interest Costs Base Contract Price – Fix on Estimates /Budgets Clarity of Sharing of LiabilitiesFaster Ramp-up and Achievement of PG

‘Core competence’ of Engineering and Project Management - best in hands of Experts

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Challenges for EPC Players

Fighting the ‘High Cost of EPC’ MythChanging the mindset of Traditional Fragmented Approach Suitable partnering for both – Tech’ologist / Local

ExecuterEnhancing Engg Manpower / Manufacturing ResourcesRecruitment/ Training /Retaining Construction EngineersStandardization of Commercial Terms Rationalisation of Taxation Structure Low Entry Barriers for Outdated Technologies

Customer Support Required to Strengthen EPC Route

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Unfinished Agenda

Steel making /Rolling and Finishing Mill areas under EPC Mode

Ensuring Downstream Steel Making Units to be similarly packaged like Iron Making so as to ensure interfacing and integration of the

total plant .

Encourage Technologists as well as Indigenous Players to come together to

provide EPC solutions .

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We look forward to a more pragmatic approach wherein the huge challenge of

increasing the steel capacity of the country to 160 MT is taken up in a manner which could

not only ensure faster and quicker completion but overall could also help in saving the total

project costs .

Way Ahead …

ASSOCHAM

Thank You