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The positive note for the Indian steel industry to begin with 2015 rings off the two major announcements made recently: one directly making impact to the steel industry, the other in a roundabout way.The Central PSUs plan to set up to set up four steel plants in Chhattisgarh, Jharkhand, Odisha and Karnataka at the cost of Rs. 1,50,000 crore. The

government may invite other partners to join the projects. Should the projects by SAIL, NMDC, and RINL see the light of the day, a capacity in excess of 20 million tonnes will add up to the present steel production level. On the other hand, in what is seemingly a referendum to the companies act, the government has clarified to cut down the maximum share holding from 51 per cent to 50 per cent, turning the government PSUs to firms with government holding 50 per cent share tag. The step is expected to interest many foreign players to invest in Indian industrial sectors, a steel industry being a leading sector of them. This prospective beef up of the Indian steel industry is likely to be equally backed by the Make in India concept and expected resolutions of issues around the mining industry.The healthy optimism is led by the expected reopening of the mining industry in coming months. Goa and Karnataka are likely to see some activity beginning by mid-2015, if not early. Green and brown field steel expansion plans are right on track and will boost production growth by nearly 5 to 6 per cent. Issues surrounding steel dumping may get answered with higher taxes and anti-dumping duties. Export duties and restrictions on iron ore may ease as the government has planned and introduction of GST would help in easier and faster movement of finished goods within the country.Global iron ore and coal prices will remain low due to surplus availability while domestically, the situation will open up after the restrictions are pulled down by the state governments and apex court. 2014 has been challenging for the industry faced with regulatory issues and sluggish demand from major steel consuming sectors like infrastructure and automobiles. India retained its 4th position among world steel producers in 2014 with a production growth of 2.4 per cent over 2013, surpassing the global average growth of 1.8 per cent. However, in 2015, with a production growth of 6-7 per cent with improved capacity utilisation, India can overtake the US and jump to 3rd position, globally, in terms of crude steel production.The central government has set a wide array of infrastructure projects including major and minor ports, highways, freight corridors and even construction and rural projects to boost the consumption of steel and create a robust demand going ahead.Hence, we hope the steel industry will stage a turnaround in 2015.

Editor & PublisherNIRMALYA MUKHERJEE

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Indian Steel Industry May Turn Around in 2015

Vol. 17 No. 3 January 2015

From The Desk 1

Cover Story 4Essar Steel: Pioneering Innovations, Promising Excellence

Face To Face 14

Dr. M. Venkatraman Sr. Vice President &Head (R&D ),Essar Steel India Ltd.

Statistics 64

News Desk 61

Overview 41Financial Performance of the Indian Steel Sector- Some Selected Compa-nies

Furnace 45Blowing down and Sala-mander tapping in Vizag Steel

Company Profile

58

Oerlikon Leybold Vacuum rings in a decade of tech-nology in India

Product Profile

59

2015 manus: On the look-out for challenging plain bearing applications

Special Feature

55

Optimize your Operation Profit through Rotary Machine Healthcare Bearing Handling & In-stallation

Mr H S Bedi, CEO, pipe mill, Essar Steel India

Mr. Dilip Oommen, Man-aging Director & CEO, Es-sar Steel

Mr Santosh Mundhada, CEO, Plate Mill, Essar Steel

Mr. Ravi Singh, CEO, Essar-Hypermert

Mr. Firdose Vandrevala, Executive Vice Chairman, Essar Steel

Mr. R. V Sridhar, CEO, Pune Facility, Essar Steel

Cover Story

STEEL & METALLURGY 4 JANUARY 2015

Essar Steel: Pioneering Innovations, Promising Excellence

Innovations in Pipe Mill to Enrich Product Basket

Essar Steels core competency lies not just in the fact that it offers high quality flat steel products conforming to international standards for diverse industrial segments, but also in its envi-able track record for pioneering many firsts in the country- commissioning In-dias largest single-location steel plant, pioneering the development of new high strength steel grade, raising the level of product sizes specification, at-taining international standard certifica-tion for both products and operations.

With 10 million tonnes steel production capacity, essar Steel is one of the In-dias leading flat steel producers. Essar Steels operations comprise of state-of-the-art facilities for iron ore ben-eficiation, pellet making, iron making, steel making and downstream facilities including cold rolling mill, galvanizing, pre-coated facility, steel processing, extra wide plate mill and pipe mill.

It offers over 300 grades of flat steel conforming to quality standards of international certification agencies and caters to a wide section of indus-trial segments that include automo-tive, ship building, white and yellow goods, general engineering, power plants, hydrocarbon industry, pipe making and defense among others.

The company accord highest importance to corporate governance standards. Each of the operating units has been converted into a Strategic Business Unit (SBU), which enables it to to respond to the customers requirement faster.

Essar Steel Hazira Complex houses

three SBUs: Hazira Facility, Pipe Mill and Plate Mill. It has invested Rs. 37000 crore in building complex.

Largest Single Location Steel Plant at Hazira:

Hazira Steel mill is Indias largest single location flat steel plant. The facility comprises three iron making facility of Direct Reduction Iron (DRI), Corex and Blast furnace, which gives it flexibility in the usage of raw materials and energy source. The facility also houses a 6.8 MTPA sponge iron plant (the worlds largest gas based sponge iron plant in a single location). The facility uses two steel making technologies of Electric Arc Furnace and Conarc and two rolling facilities of Hot Strip Mill and Compact Strip Production. The Hazira facility has a rolling capacity of 7.1 MTPA. The plant is certified with The Hazira complex is

certified with ISO: 9001:2000, IS 9002 and TUV certifications, ISO 140001 and India Chiller Energy Efficiency Project (ICEEP) Protocol compliance.

Established in 2008, the pipe mill in the Hazira complex is one of the modern facilities, driven by the rapid pipeline infrastructure development across the globe. The mill produces both He-lical Submerged Arc Welded Pipes (HSAW) - 0.275 MTPA and Longitudinal Seam Submerged Arc Welded Pipes (LSAW) - 0.325 MTPA. The pipes con-form to API, BLS and DNV certification.

The large diameter pipe market (over 80) over the next two years is esti-mated to be over one million tonnes, particularly driven by expansion of the drinking water infrastructure

Cover Story


in western India and increased ex-ploration of sour natural gas fields.

However, none of the units in the coun-try had the ability to produce pipe in excess of 100 and coat pipes over the sizes of 60. Essar Steel upped its ante to fulfill this ever increasing product specification. As a result, it modified its HSAW unit and the coating units (Exter-nal and Internal) to manufacture pipes in size up to 134 and coat pipes, the size up to 120 in its pipe mill at Hazira.

The pipes are used for government projects. One of Essar Steels compe-tencies lies in its adept upgradation efforts aimed at enhancing capacity of the entire process chain involving basic pipe making, welding, hydrotesting, beveling application area, quenching zone and the blasting area for coating.

Equipped with facilities to ensure intensive inspection and testing, the unit proved its mettle in im-proving the forming technologies and testing facilities namely hydro-testing capability (enhanced from 350 bar testing to 600 bar testing).

Apart from the major domestic proj-ects, the products rolling out of this mill are approved by international com-panies like Gasco, Shell Global, ENI, Socar, Occidental-Qatar, Ecopetrol, Pacific Rubiales, Flour, Kvaerner etc.

The pipe mill has distinctive advantage in terms of easy acces to raw material from Hazira Steel Mill complex which in turn ensure fast-delivery mechanism leading to timely execution of orders.

Joining Global League of Extra Wide Plate Makers

with Plate Mill

Bettering Future Through Research and Development

The plate mill at Hazira complex is one Indias widest plate mill producers with 5 meter wide plate with a capac-ity of 1.5 MTPA. The mill has advanced facilities and uses sophisticated pro-cessing techniques like TMCR coupled with ADCO, Direct quenching (DQ), indirect radiant heating for normaliz-ing, roller water quenching and tem-pering, in-line ultrasonic testing for producing steel plates for extremely critical applications. The mill is Indias largest and widest with a capacity of producing plates in strength levels of 1500 MPa and width up to 5000 mm.

It is the first and the only Indian mill-and sixth in the world-to be per-mitted to use the API monogram on its plate products as well as to have received an API certification.

Essar Steel has a dedicated set-up for in-house Research and Develop

Cover Story


ment (R&D) at Hazira, Gujarat which was formally established in 2006 and is approved by the Dept. of Sci-ence and Technology. The research centre is equipped with sophisticat-ed equipment and a highly qualified team of engineers and technologists.

The research is conducted in vari-ous fields of applied research such as product development, mathemati-cal modeling and physical modeling, failure analysis, process improve-ment, and waste management.

In order to reduce developmental time and improve upon knowledge gaps, R&D has entered into collabo-ration with educational institutions such as Indian Institute of Technol-ogy (IIT), Annamalai University, and research wings of CBMM Corporations.

The team has been instrumental in development of various import sub-stitute steel grades like Bake Harden-ing steel (BH -180/220) used for auto-mobile panels, quench and tempered abrasion resistant steels for yellow goods (HRB 400 equivalent), steels for naval ships and army vehicles, and

steels for petroleum line pipes for sweet and sour applications (API X-80 sweet service, X-65 sour service). Pro-cess improvement team of R&D is fo-cused on improvement of the process efficiency, and innovations by Group are being patented by the company.

Reaping Benefits Through Financial

Prudence Flexibility in Raw Material SecuritisationEssar Steel has not only provided

competitiveness to its custom-ers with its high quality products,

Essar has adopted an integration and securitisation strategy that has

it has also laid emphasis on its pro-duction process and financial per-formance to make the competitive.

Essar Steel has showed sood per-formance in the recent times.

Besides, the company proved its mettle in its investment strategy. In recent times both Hazira steel complex and Paradip pellet facility proved to be the lowest cost facilities in the country.

In case of Hazira Steel complex, Essar Steel incurred a cost of just US$750 per tonne which is much lower than indus-try standard. On a like to like basis, Essar Steel has managed to create this asset at a significantly low capital cost. In some cases, the costs are lower than other steelmakers by as much as 50 per cent.

Recently, Essar Steel has dollar-ised its rupee debt into US$ 2 billion through export securitization and external borrowing. The company reaped in significant benefits from the step as it has resulted in large inter-est saving of Rs. 720 crore annually.

Cover Story


enabled the steel giant to keep its costs low even with the expanded ca-pacity. A bulk of its iron ore needs have been secured through offtake agreements with NMDC and captive mines in Jharkhand and Chhatisgarh.

In addition, the iron ore beneficiation plants have been set up to facilitate usage of low grade iron ore fines abun-dantly available in the country. Two mega projects to this end are the pellet making facilities in Odisha and Andhra Pradesh. The Paradip pellet plant in Od-isha is a much coveted 12 MTPA capac-ity project which is linked with iron ore beneficiation facility at Dabuna with a 253 km long slurry pipe line. The 8 MTPA Visakhapatnam pellet facility is linked to iron ore beneficiation plant at Kiran-dul with a 267 km long pipeline. The first phase of 6 MTPA of Paradip pellet plant is complete and the company is gearing up to raise upto nameplate ca-pacity of 12 MTPA with parallel capaci-ty upgradation of iron ore beneficiation plant at Dabuna in the second phase.

With the commissioning of these two integrated complexes, Essar Steel has become the largest pel-let producer in the country with 14 MTPA pellet making capacities.

For its energy requirements, Essar

Steel has long-term power purchase agreements and access to source cheaper coal based power from its cap-tive plants. The offtake agreements combined with the captive mines and easy availability of low grade iron ore provide Essar the necessary raw mate-rial security to operate its steel plant in the most cost-effective manner.

Foraying into Diverse Sectors with New

Product DevelopmentEssar Steel is a pioneer in developing

new products for various sectors as well as catering niche segments. Some of the recent indigenous developments include indigenous development of bal-listic steel, soft carbon magnetic steel for nuclear energy sector and ultra-high tough steel for automotive sectors.

It has pioneered the development of high strength structural grade with 780MPa in Q&T conditions which was not available earlier for defense sec-tor and was imported to the tune of 100,000 tonnes annually for ballis-tic application and battle tank. Essar Steel recently won an order of DMPL to develop steel grade of 1700 MPa.

In the automotive sector, Essar Steel has always been a forerunner among globally approved suppliers for major automakers. It is the first steel pro-ducer in the country in developing new generation crash resistant steel, high strength steel up to 440 MPa and dent resistant steel. Essars newer version of high strength steel grade with strength of 700 MPa is used for making long members of trucks offering a weight saving potential of 17-20 per cent. Essar

Cover Story


Steel is also foreunner in the country to develop a highest thickness of 20.6 mm in X-80 grade for line pipe application.

In line with developing new products, all of Essar steel products are cus-tomised grades for specific applica-tions which provide customers with added competitiveness and make Essar Steel the preferred supplier.

Going forward, Essar Steel can meet the entire requirement of Navy, steel for aircraft and critical boilers.

All these steps pave the way for In-dia to export value added steel and earn precious foreign exchange.

Catering to Customer Need with Largest

Processing and Distribution Network

Looking Ahead in the Future

With one of Indias largest steel pro-cessing and distribution networks with a capacity of 4 MTPA Essar Steel caters to its customers on the go.

Essar Steels downstream facility at Pune with a 0.65 MTPA pickling line,

Looking ahead it is focusing increase its share of value added steel up to 50 per cent of its products basket. Cur-rently, ESIL manufactures about 30% value-added steel out of its total capac-ity of 10 million tons per an-num (mtpa) at Hazira. We would now gradually shift our focus to utilize 70% of Haziras capacity to manu-facture special steel for

0.6 MTPA cold rolling mill, 0.5 MTPA galvanising line and 0.4 MTPA co-lour coating line offers tailor made steel solutions to customers with an emphasis on reducing inventory levels and processing costs for cus-tomer with just in time supplies.

25 per cent of the products are chan-nelised through dealers. Besides, Es-sar Hypermart, a well spread net-work with over 350 outlets across locations is Indias largest retail chain offering customised ser-vices to OEMs, retailers and SMEs.

defence-related requirements in the next three to five years, Dr. M. Ven-katraman, Senior Vice-President and Head, R&D, Product Development and Applications Engineering, ESIL

The company has constantly maitained its export volume at 25-30 per cent. It wants to focus in the supply of future oriented niche segments like solar pan-els, tubular structural plates. On the investment front, Essar Steel plans to invest Rs.1, 500 crore over the next one year. The company intends to complete the second phase of a six million tonnes per annum (mtpa) pellet plant at Paradeep in Odisha and take up a 1.35 mtpa coke oven plant at Hazira, Gujarat.

It is also considering setting up a 270-MW multi-fuel captive pow-er plant at Hazira, using import-ed coal fines and gas generated in the Corex steel making process.

Firdose Vandrevala, Executive Vice-Chairman, Essar Steel, said having made huge investments in Odisha, the company will look for sustainable business development in the State.

We may also consider investing in an integrated steel plant in Odisha, if the Government allocates iron ore mines for captive use. The company has signed a memorandum of understand-ing with the State government to ac-quire part of the land parcel required for setting up a steel plant, he added.

FaCe to FaCe


The Prime Strategy Should be Building Brand Loyalty which Should be Customer Specific, not

Geography Specific

NM: Mr. Vandrevala, first of all, we will begin with the scenario which we are go-ing through right now. Indian steel industry needs some kind of consideration and rational-ization in the face of overca-pacity in steel production. What is a curtain production level you feel should be for ma-jor players in the next fiscal?

NM: Are you talking to steel ministry and commerce minis-try for having a mechanism in place to counter this situation?

NM: Looking forward in terms of raw material avail-ability, where do you ex-pect the raw material prices to stabilise in 2015?

NM: Chinese steel production is slowing down a bit, of late. In October 2014 production figure was 67 million tonnes, whereas the figure came down to 62 million tonnes in Novem-ber 2014. Chinas domestic demand is also slowing down which led to the surge in their exports, particularly to India. Do you think this instability in China could result in even more steel dumping in India?

NM: How much raw material will Essar be importing in 2015?

FV: In 2015, India is likely to turn into a net steel exporter from a net importer which was a case through the last few months. In Indias case, mines have seen reduction in raw material supply due to ban, a situation which has forced the domestic steel producers to import raw materials. Consequently, the produc-tion cost has gone up and the product prices have also gone up. On the other hand, in the international market, raw

FV: The steel industry members and the government are already aware

of this upsurge in Chinese exports.

We have already had discussion with

steel ministry, commerce ministry

and Indian Steel Association regard-ing this. The government and indus-try are jointly working on this issue.

FV: Last 10 years the average raw materi-al price has been $83 per tonne. I expect the prices to hover around this trend and not again back to the level of $100.

FV: There are already enough signs of it. In 2012 the average export from Chi-na to India was 4.3 million tonnes per month. In 2013 the figure was 4.7 mil-lion tonnes. In 2014, as yet the figure is 7.8 million tonnes per month. And last three months have seen exports to the tune 9 million tonnes per month. So, this surge in exports is quite wor-rying for the Indian steel producers.

FV: We plan to fulfill our raw mate-rial requirements from the domestic market mostly. One important aspect of our business strategies is low trans-portation cost. So, we can convert the Opex into Capex. Essar has put up beneficiation plants and pellet plants, connecting them with slurry pipelines. If the company has to depend on the import then that investment is use-less. So, even if the domestic raw ma-terial prices go up marginally from the international prices, using domestic raw material will still be economical.


material prices have gone down which have pushed the product prices low. So, once the raw material prices in the country return at par with the interna-tional level, Indian steel producers will again become competitive enough for exports as well as in the domestic mar-ket. I expect domestic demand will im-prove in 2015 and hence I do not think any major players are thinking of curtail-ing their production for the time being.

FV: Last 10 years the average raw materi-al price has been $83 per tonne. I expect the prices to hover around this trend and not again back to the level of $100.


From raw material to capacity enhancement, from steel dumping to value added products- Mr. Firdose Vandrevala, Executive Vice Chairman, Essar Steel, shared an all round view with Mr. Nirmalya Mukherjee, Editor, Steel & Metallurgy

FaCe to FaCe


NM: We understand Essar Steel is focusing on increasing its share of value added prod-ucts and Essars each SBUs is designed for it. But as regards the prices, Chinese value added products still outrun our value added products in price war. To tackle this dis-parity, do you think it will be a wise idea to operate in markets or product segments where China is not present?

NM: Essar Steel is yet to reach its nameplate capacity of 10 million tonnes. We under-stand Essar Steel is not mull-ing any brown fieldexpansion right now as the financial sce-nario is not very conducive for any major investments. In such case, what are the other internal innovations that Es-sar Steel is planning to achieve the rated nameplate capacity?

NM: We understand that it is not mandatory for Essar Steel SBUs to source materials from mother plant and pro-mote mother plant. They can source materials from other players also. How far do you rate this as a fair strategy?

NM: With JSW and JSPL aim-ing for 20-25 million tonnes in a single location plant, Es-sar Steel will not be in the top bracket of steel produc-ers anymore. How do you see Essar in this scenario?

NM: Though Essar Steel has a special pricing agree-ment with NMDC for iron ore fines, still the company is yet to reach the raw mate-rial securitization that Tata Steel, Vizag Steel Plant and SAIL get from government through allotment of some mines. Is Essar Steel looking at any geographical area for raw material securitization?

FV: I do not think it is a feasible strat-egy to operate in any such market where China in not present as once Chinese steel producers will soon fol-low the trend and enter that market segments also. And considering the trend of their low prices they will have an upper edge in that segment also. It is more important to raise value added product share in the niche seg-ment rather than jumping into an un-traded territory. It is more sustainable to choose the customers, establish a relationship and make sure that the ex-perience cannot be replicated. This ex-perience includes product, price, deliv-ery and many other things. Therefore, the prime strategy should be building brand loyalty which should be cus-tomer specific, not geography specific.

FV: There are plans for funding for ramping up productions. The invest-ment is to the tune of Rs. 1500 crores.

FV: Apparently, the strategy seems to be cross promoting the competitors or other players and not contributing to companys benefits. But, if we look from a different perspective, it only proves that the SBUs are still getting materials at cheaper prices than mother units. It

FV: Essar Steel is not focused on raising the production capacity; it is concen-trating on increasing value added prod-ucts to the product basket. Essar Steel already produces more product grades

FV: The iron ore problem in the country is a short term problem. We will look for long term linkages with suppliers. That is why we have put up the beneficiation plants.

FV: Though there is much hype about the multifold increase in rural con-sumption of steel, the main growth in steel consumption has to come from rapid urbanisation projects only. De-velopment is high where level of ur-banisation is high. Against the world urbanisation level of 50 per cent, In-dias current urbanisation level stands at 30 per cent. This has to change with extending development. Rural con-sumption needs to be increased cre-ating many new application of steel in rural areas but even it increases it will double from todays level of 6kg person to 12 kg person whereas there is scope for urban consumption to in-crease from 50kg to 100 kg per person.

NM: Where do you see the steel consumption in-crease in the coming years?

will further lead the mother plant to review its pricing policies and vie for becoming competitive in pricing. How-ever, the step looks absolutely precise where cost effectiveness is concerned. For example, Essars Hazira complex can savefreight on supplying to closer markets than supplying to Pune facility. Likewise, Pune facility can save on opex and processing time while sourcing from local supplier than from mother plant in Hazira. So, ultimately the com-pany can save on two occasions: from saving on freight and buying cheaper raw material. Also, as our strategy is customer specific, fast processing is inevitable from companys point of view which is only possible through these strategies. It will provide the company with long term sustainability.

than any other domestic steel produc-ers. We produce hot rolled coils, cold rolled coils, galvanized, pre-painted, wide plates, HSAW and LSAW pipes. No other steel producers produce so wide range of product mixes in a single location. We provide very high qual-ity product with high level of testing for very high level of application, high level of accreditation. So, we are focus-ing more on quality, not on quantity.

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FaCe to FaCe


I Expect in 2-3 Years Economy will Again Grow at 7-8 per cent and Steel Demand will Grow at 8-9 per cent

NM: Of late, Essar Steel has developed new product grades for various applica-tions which include even steel for ballistic missile and battle tank grades. Could you high-light the entire product mix-es that Essar is looking at?

NM: Talking about the do-mestic demand scenario, since our government is fo-cusing on the development in the north east region, do you think there could be substantial coated product demand for roofing applica-tion in the north east region?

NM: Essar has received all types of approvals for API grades. For the API grades what markets are you looking at and what will be the export volume?

less tube mill as of now. Is Essar Steel looking at the possibility of setting up a tube mill in the long term?

NM: In terms of exports, primarily to the Middle East, what volume range are you looking at? And what product mixes are you planning for this market?

NM: What level of capac-ity utilisation is Essar look-ing at in the next fiscal?

DO: Yes, we have developed high strength steel for the Navy and the Armed Forces. Some of these grades are DMR, Alfa and Bravo which will be used for ship building and sub-marines. We target to provide entire high strength steel requirement of the defense sector as total import substitution soon. This will be a mat-ter of pride as India will be capable of producing its own steel for defense sector which is a highly priority sector.

DO: No doubt, there is scope for demand of coated steel in this category in the north east region. Also after our prime minister stressed on the development of north east which is a focus area. We have to keep in mind the freight issues since transportation to the region is a long way from west. We have to remain competitive and we will work on that.

DO: Our plate mill produces 80-

DO: We may opt for a seamless tube mill in the long term but not right now...

DO: Selecting the right geography and adding value added products tothe product basket are two very important things. Middle East market has been an area of focus for us for quite some time now. We have received a good order book for the plate mill and even for other grades of hot rolled steel and non-API grades. We are also keen on US markets. Our sales and marketing team has visited the US subcontinent. Once exports are allowed, we will play a major role in exports to the region.

There are also certain parts of Africa where we have ample scope to cater to certain qualities these markets demand such asin thin hot rolled coils, thin cold

DO: Our main strategy is to have minimum six months of order book. We are looking at big order book.

rolled coils, coated steel products. One of the interesting developments we may catch up for Africa is this coat-ing solution for roofing in the building construction which can be conducive to the extreme weather conditions in the region. The coated steel signifi-cantly drops the temperature within the building by as much as 120c. At present, major importers of our coat-ed steel solutions are Russia and Italy.

Mr. Dilip Oommen, Managing Director & CEO, Essar Steel

NM: No steel producers in India are going for a seam-

Mr. Dilip Oommen, Managing Director & CEO, Essar Steel discusses with Mr. Nirmalya Mukherjee, Editor, Steel & Metallurgy his companys vision to transform itself as a valueadded product maker in theIndian Steel Industry.

FaCe to FaCe


NM: Most of your competi-tors over the years have in-creased their branded prod-uct share whereas Essar Steel in spite of having retail chain Hypermart in place sellroughly only 20 per cent of its products as branded prod-uct. Do you plan to extend share of your branded prod-uct in the entire product mix both for institution sales as well as retail sale segment?

NM: What is your CRM output target?

NM: In the face of surg-ing Chinese steel exports, how do you see a mecha-nism from the government to weather off the issue?

NM: How much iron ore will Essar Steel be importing this fiscal?

NM: What kind of capex are you planning for the next fiscal?

NM: What kind of plan does Essar Steel have for raw material securitisation?

NM: What do you think the government should do to regulate the secondary players who produce al-most 50 per cent of the steel produced in the country?

DO: In plate product we have rolled out branded products. We already have branded products incolour coated, galvanized, HR, CR segments.

DO: Now with our production ramp-ing up, our first target would be to ensure maximization of value added products. So, CRM capacity utilisation will be maximized.Capacity utilization will also be maximized in the plate mill, the pipe mill and Pune facility.

DO: Chinese steel dumping is posing threat, so are Japanese and Korean steel dumping. Japan and China are going through bad economic phase which is one the reasons domestic steel consumption has decreased. The situation has resulted into steel dumping in India. For Chinese steel export, at least the export duty is 7.5 per cent, whereas Japan and Korea en-joy duty free export as part of the FTA.

DO: Both our Odisha and Vizag pel-let plants will be fully operational in the next fiscal. So, that will re-solve ore issue to some extent. Be-sides, we are looking at roughly 3 to 4 million tonnes of iron ore import.

DO: Fortunately, gas prices are coming down. In the long term we will prob-ably look at putting up another blast furnace depending on the prices of gas. We have taken a prudent decision through dollarising our debt which has substantially provided us with interest saving. We expect the interest rate to be in the range of 6 to 6.5 per cent

DO: We are working with government for renewing the policy for alloca-tion of mines. For VizagPellet plant, we have long term agreement with NMDC. The inherent advantage of the Odisha project is that the beneficiation plant is surrounded by mines. We are prospecting a mine in Chattishgarh.

DO: Any producer, small or large, has the right to produce steel provided he meets the environmental norms, meets the quality standards and ethical practices.

In this regard, India should take cue from USA where domestic steel pro-ducers are safeguarded through non-allowance of steel dumping. It is better to be proactive rather than re-active and likewise we should put in some safeguard measures in place.

omy improves. With the emphasis on infrastructure by the government, steel consumption is set to bounce back. As of now, no investors are ready to in-vest in the Greenfield projects. I expect in 2-3 years economy will again grow at 7-8 per cent and steel demand will grow at 8-9 per cent. A time will come when steel consumption will catch with supply and India may have import steel.

NM: How long do you think we have to sustain to tide over the demand crisis?

85 per cent of API products. But we are also looking at non-API grades for risk mitigation purpose

DO: It depends on how fast the econ-

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We do not Make More Steel, We Make More of Steel

Mr. R. V. Sridhar, CEO, Pune Facility, Essar Steel throws light on the strategies and innovative products this SBU is rolling out to nullify Chinese monoply in the global market

NM: Could you please brief us about the Pune facility?

NM: How do you see Chinas position in the colour coated product market? How do you position your company vis--vis the Chinese suppliers in the global markets?

NM: Give us an overview of the innovative products this SBU offers?

RVS: In this SBU, we have three cold rolling lines, two galvanising lines, and two colour coating lines. This plant is the first zero discharge plant in India. The waste water of the plant is recycled 100 per cent with the multi effective evaporator and RO process and is re-used in the plant. The water is used for gardening, cooling of equipment etc. In 2011-12 fiscal we saved about 9,224 m3 water, in 2012-13 fiscal 13,210 m3 water, in 2013-14 13,375 m3 water and 2014-15 during 9 months the saving has already surpassed 9,000m3 and we hope by the end of this fiscal the figure will surpass 15,000m3. At full capac-ity, we can save 1500-2000 m3 water per month. Besides, we have facility to reuse the hydrochloric acid completely through our acid regeneration plant. We also provide this service to outside customers. We emphasize on safety very much and hence we have arranged for workers safety. We have a fire safe-

RVS: Chinese invasion in the global market is obviously a threat to many economies and their industries, par-ticularly steel industry. We are already well placed globally to cater to over 100 countries. However, we make sure to diversify our geographical presence to avoid Chinese monopoly. Because, of steep subsidies Chinese producers sell at $60-$70 per tonne less than Indian product prices in any market. So, pri-marily our strategy is to target Chinas blind spot which are the markets where China is not present. For example, China does not export these products to small countries such as Argentina, Venezuela etc. China specialises on white shade goods whereas we try to focus on non-white shades as much as possible. Chi-na produces standard thickness sizes of 1,220mm and 1,250mm whereas we deliberately offer in non-standard thick-ness sizes of 1065mm and 1087mm. Also, we specialize in high end appli-cations where China lacks the finesse.

RVS: Essar Steel colour coated sheets are available in a variety of paint sys-tems like Regular Modified Polyester (RMP), Silicon Modified Polyester (SMP), Poly Vinyl Di-Fluoride (PVDF). The supe-rior coating technology resists cracking and peeling even during heavy forming operations. PVDF paints offer outstand-ing resistance to ultra violet radiation, sunlight, and coupled with excellent formability and corrosion resistance; provide outdoor life of up to 25 years.

Besides, we have many innovative products to offer to various sections of customers.

We offer tri colour coated sheet for which we are already in conversation with India Railways. Normally, asbestos shades are used in platforms which can be replaced with this tri colour coated sheet which will aesthetically enhance the outlook of the platforms as well as give a national feel to the public place. Essar Cool Roof is another innova-tive product which is used as rooftop and is capable of decreasing the room temperature by 8-10oC. We product basket includes anti graffiti or anti dirt sheets. We offer ARS (Abrasion Resis-tant System) which is scratch resistant and wear resistant thin sheet system. We have developed a product called anti-bacterial paint which can be used

ty control room, and we are the only plant with an environmental laboratory.

for cladding and roofing purposes in high sanitation is inevitable like hos-pital, cold storages, granaries etc. we offer medium carbon high carbon which has divers use in dry and wet clutches of automobiles, bullet car-tridge, hair pins, textiles drops, hang-ers, seat belts, motor cycles chains, etc.

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NM: Can give a break-up be-tween the colour coating and galvanizing products in terms of tonnage? NM: What are your future

looking statements?

NM: Give us a geographical break up of your export vol-ume.

RVS: Our total volume is roughly 40,000 tonnes out of which 24,000 tonnes is in the pre-painted product segment, 3,000 tonnes in medium carbon high carbon, 4,000 tonnes of CRFH, 5-6 thousand HRPO and SGPA or galvanizing in 4to 5 thousand tonnes.

RVS: Apart from focusing on regular solutions, we will focus on the signage segment where we will offer custom-ized typical colour coated products to companies who maintain brand iden-tity through their unique logos and co-lours. We are looking into the prospects of co-branding certain fabricated prod-ucts and profiles. We will focus on rural markets to increase steel usage through various applications. We do not make more steel, we make more of steel.

almost 60 per cent of our products to the domestic market and 40 per cent to global markets. Out of the 40 per cent 40 per cent is exported to Europe, 10 per cent to Russia, 10 per cent to the Middle East region, 10 per cent to Af-rica, 10 per cent to the US and Latin America and 10 to Indias neighbour-ing SAARC countries. Italy imports one fourth of worlds total painted prod-ucts and it is our largest customer. We have delivered painted products for Barcelona stadium. In the long term, we will increase our offerings in the domestic market more to avoid the vagaries of the international markets.

Among the noteworthy domes-

RVS: Earlier our export was to the tune of 90 per cent and domestic sales were 10 per cent. Today, we sell

tic projects, we supplied for Volvo Bangalore, Delhi Metro Railways, Kochi and Mumbai Airports etc.

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We would Like to Take a Pole Position Among Fabricators in the Country in Terms of Volume

NM: Mr. Singh, first of all tell us how do you see ser-vice center business evolv-ing as an individual entity in India which will reduce burden at customers end?

NM: Could you brief us about Essars service centers?

NM: What is the volume Es-sarHypermart service centers handle in terms of tonnage?

RS: Service centre business in India has evolved in the last decade and is still in its infancy stage, the reason being the steel scarcity in the country even to this day which continues to fuel competi-tive behavior of Mills. In case of steel scarcity, there is very little premium on supplying steel and much less on timely delivery and quality skills. If the economy becomes dynamic, product mix, quality of the material needed for making new products also becomes dynamic. For example, the demand in the automobile sector in India has kept changing every 20 years towards light-er andstronger car bodies for creating fuel efficient cars which has kept flat products development evolving for the sector. In case of no dynamism, there is no need for a service center and the focus is entirely on the cost instead of quality and timely delivery. Today, India is transiting from cost focused country to value focused country. Due to the lack of this dynamism in the manu-facturing sector, customers in India have focused on the cost rather than

RS: We have total seven ser-vice centres across India span-ning in Hazira, Bhuj, Delhi NCR, Pune, Indore, Chennai and Kolkata.

coils from 0.3mm to 3mm in thickness, both galvanized and colour coated products, plates from 5mm to 150 mm in thickness. In all these products, Es-sar provides a wide range from nar-row slitting of upto 1 wide to the full width of the coil, length upto 12 meters or more which can be customized. As part of its fabrication service, Essar already has constructed coal handling plants, bridges, road over bridges and flyovers. We are in the process of put-ting up the entire structure of a power plant etc. In addition to these, Essar service centers also provide ISI certi-fied TMT bars which are sourced both centrally and through contract manu-facturing locally. Through contract manufacturing we bring in added val-ue to the customers as we can supply the TMT bars manufactured through contract at various locations closer to the customer projects site on time.

the value. Service centreservices obvi-ously increase the cost for a customer at the outset. But in spite of increase in the cost per unit, total saving goes up. So, the customer gets benefit on total cost of transaction, but we need to look at the operations in a more broad manner rather than in a narrow way. The gap between Indias steel im-port and steel export has turned and India has become a net Steel exporter for last one year and may continue to be so for a few more years. However, theMake in India campaign will help rampup infra development and again require imports as the Greenfield steel projects are going slow. Even if India starts exporting steel outside In-dia, it will again have to import certain grades of steel into the country and more and more service centers will be set up to provide services to this end. Wherever the supplier is away, local representation of the supplier is in-evitable to make sure that the supply chain and the trust is not hampered.Currently all the large service centers in the country are mill backed out of which we are the largest with Hyper-mart retail chain. The future of service center business is also quite promising.

NM: Do the TMT bars which are sourced locally through contract manufacturing pass through any stringent internal quality checks?RS: Yes, each and every batch of prod-ucts has to pass a quality inspection of an international inspection agency like SGS before supply by EssarHypermart.

NM: Is there possibility to work on the profiling part in tandem with Pune facility or the fabricators especially for the colour coated segments?

RS: The total tonnage the service cen-ters handle is about 2 million tonnes. We handle hot rolled coils right from 1mm to 20mm in thickness, cold rolled

RS: Each of the SBUs reacts to the mar-kets in the best interest of its custom-ers. The market of roll forming in PPGI is driven by local considerations, some of them contractors considerations and some mill considerations. Each of

In conversation with Mr. Nirmalya Mukherjee, Essar Hypermart CEO Mr. Ravi Singh discusses how the SBU is expanding its service spectrum to its customers.

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tween your own mill products and products from others?

NM: Traditionally, out of therebars and your mill pro-duced flat products, which is the higher in volume?

NM: What will be the share of value added product in your product basket?

NM: Could there be a possibil-ity where EssarHypermart can provide the entire solution for a steel structure building?

NM: In the long term, will the service centres think of selling forged prod-ucts or the final products?

NM: Looking at long term demand supply mismatch, what do you think Essar-Hypermart can offer to cre-ate demand in the country?

NM: How effectively do you see the retail business chan-nels developing in the country?

NM: As of today, what are the numbers of Hypermart?

NM: What is the total value of Hypermartand Expressmart-business put together?

NM: During the next fiscal do you have the target of in-creasing numbers of Hyper-mart and Expressmart? What kind of volumes are you talk-ing about for the nest fiscal?

NM: So, your service center business is looking at pro-viding complete solutions even for turnkey projects

RS: The proportion is roughly 70:30 in sales which we would like to drive to 50:50.

Out of the total product volume Hy-permart offers currently, 70 per cent is our own mill produced products. And out of the remaining 30 per cent rebars are the second largest chunk.

RS: Out of the total products we of-fer, 90 per cent will be value added products in terms of customization and about 20% in terms of metallurgy.

RS: Today, we provide the custom-ers with engineering requirements depending on the design of their structures. We have tie ups with de-signers who do the designing part for our customers. Yes, we will be in a position to provide entire solution.

RS: We aim to provide those so-lutions in time. We are lever-aging our experience for that.

RS: Demand cannot be created, so to speak it can only be substituted. If the dynamism in the economy increases, automatically dynamism in the steel us-age intensity will also grow and hence the service centres will play a major role in offering best solutions to the customers and make them more pro-ductive and efficient. Customers of ser-vice centres will also be more profitable as they focus their attention and invest-ments on their core activities. So yes, a strong Service Centre industry may help halt the substitution of steel by other materials and reverse the trend.

RS: Essar has 52 Hypermart outlets and 300 Expressmart outlets in the country.

RS: The total value is roughly Rs. 6,000 crores.

RS: If there is scope for value creation for the customers we may increase the numbers. And, probably Hypermart will handle more than 2 miliontonnes provided there is better stabilization.

the contractors has its own product profile according to the local demands for particular applications. It is not pos-sible for the service centres to cater to these small markets segments. Essar-Hypermart supports the Pune facility as and when they require in terms of slitting, cut-to-length, other types of processing and marketing. But, we are not looking at these services as a focus segment for ourselves at this stage. For EssarHypermart fabrication will remain the focus area moving towards applica-tion support. As I have mentioned that essarHypermartwas contracted to pro-vide entire fabrication solutions for a coal handling plant. The day is not far when EssarHypermart will receive or-ders for the entire structural designs of buildings and we will have to develop our own profiles suited for our own applications which we will provide.

RS: Yes, we are already starting to do thatfor which we are talking to a lot of construction companies. We would like to take a pole position among fabrica-tors in the country in terms of volume. We are supplying fabricated parts to one of thetop mining equipment sup-pliers. We suppliedfor their India oper-ations also.So, it will be a mix of market requirements and value we bring to the customers. We can execute the engi-neering part for customers, source ma-terial for customers from Essar mill or from other suppliers. Today, we source material both locally and from our mother plant for the projects depending on the proximity of the suppliers from the project site. For example, we can source material from SAIL, JSPL or JSW for a plant in southern parts, SAIL for a project in eastern parts, and from our own mill for a project in western parts.

RS: I think there has been a major change in the customers demand and perspective in the last decades. For ex-ample, products that were regarded as innovative products in the 90s are com-modity products of today.From a seller centric market the market has turned into a customer centric market, which is a good change. To that extent there will be a major change in the channels of delivery. So, the retail market has to transform itself to the emerging re-alities of customer experience, prod-uct availability and information.Trader retail chain survived because of lack of information on the customers end. We expect to see multilevel growth in retail channels in tune with customer needs.

NM: Out of the 2 million tonnes that you handle for the service centre, give us a break up percentage wise be-

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Our Goal Is to Bring Our Nation to Self-Reliance, Substituting All Imports

NM. First of all, congratula-tions to you & your entire team for running the plate mill so successfully. Right now there are quite a few feathers on your cap with regard to ex-ecuting challenging orders. If you could highlight the jour-ney of Plate Mill success and the recent orders that you can call as feathers on your cap?

NM. Please tell about your Product Development and-what are the new grades which Essar Steel is planning to move out of the commodity cycle?

SM: Essar Plate Mill has started its com-mercial production from 2010 and es-tablished good presence in domestic as well international market. In a short span of time, our plate mill has suc-cessfully developed & supplied various niche products globally. These products comply to the international standards with superior quality, comparable with worlds bench marking mills having de-cades of experience. Plate mill has suc-cessfully substituted imports from EU and Japan, supplying critical products to its customers first by an Indian plate mill. This has helped country with

SM: Essar Steel was always pioneer in launching Value Added products. We at Essar believe in creating value for our customers. We have got strong R&D and world class heat treatment facilities (Normalizing, Quenching & Tempering). At Plate Mill, we have al-ready developed and serviced many products in line with market require-ment. Our immediate focus is is in de-fense and high end of Line Pipe grade. We have already successfully entered into supplying for defense. We have made substantial supplies to defense for war ships. We have developed the toughest steel for them. We are the only company to do it through continu-ous casting route. We are the only com-pany in India supplying Sour Grade Line Pipe plates. There are also some grades where we want to attain higher tensile properties through with same process like through thermo mechanical and direct quench machine and also go towards more refined steel. We want

Forex. We have secured accreditations and approvals from almost all certify-ing agencies, EPC, PMC as well as cus-tomers, covering a broad spectrum of applications. Our Plate mill has success-fully executed many prestigious and challenging orders with stringent speci-fications and plates have been used in very critical projects in India and over-seas. Products developed are well ac-cepted by the customers and mill has been awarded several repeat orders.

Presently, our mill is loaded with sev-eral orders in value added grades which include long term contracts with strategic customers. These or-ders are for various applications such as Line Pipe, Boiler & Pressure Vessels, High Strength structural, Defense, Ship Building , Offshore Platforms. These in-clude Domestic as well Export orders.

Our plates have played vital role in many projects, some of which are Bo-gibeel Bridge project in Assam. Our High Strength Structural plates are used in 5km long double decker bridge being built up by Hindustan Construc-tion Limited on Brahmaputra river for Northern Railway. This double decker bridge is catering both Rail & Road, one above other. This bridge is going to consume over 70,000 MT of High Strength Structural Plates. We have successfully supplied about 15,000 MT of plates which have been transported from extreme west to extreme east. Other projects include plates used in building giant Oil tank submerged 130 M deep in the Sea by Dubai Dry Dock. There are several Offshore platforms

built up by McDoremett, Petrofac, NPCC in Middle East from our plates. Blast Furnaces of Tata Steel and NMDC are built up by our Furnace Normal-ized plates. Our plates have been used for War Ships. Several critical export equipment have been built from our plates by our elite customers. We have long list of customers who used our plates for critical applications both in domestic and intetrnational markets.

Mr. Santosh Mundhada

Mr. Santosh Mundhada , CEO, Plate Mill, Essar Steel discusses how the Mill has become global supplier of high quality Plate products and provided import substitutes in the cuntry.

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to totally migrate to High end plates. We do very less of commodity grades. Our goal is to bring our nation to self-reliance, substituting all imports. We are leading Make In India concept.

NM: In this fiscal how much you will be rolling out of this mill in terms of capacity?

NM: Out of the 80 per cent capacity that you will be end-ing up this fiscal with, how much you have earmarked for exports? What is the target for the next fiscal?

NM: In terms of quality standards, what are the stan-dards your are adhering to?

Since you are plan-ning 100 per cent capac-ity utilization, what are your plans for sourcing slabs?

NM: In terms of cost savings, as the CEO of the plate mill what are the measures Essar Steel is making in its operations to reduce energy consumption?

SM: This fiscal we are targeting to end up with about 80 per cent prod-uct based capacity utilization and out of that 10 per cent will go to the pipe mill. Next fiscal we will go for 100 per cent capacity utilization. We do sub-stantial thermos mechanical rolling.

SM: We will end the current fiscal with exports to the tune 60 to 65 per cent.

SM: Our Mill is built by integrating the worlds best in respective areas. We have all facilities under one complex to cater any kind of plate. We have great level of adoptability and flex-ibility in our mill. Our own Steel Mak-ing facilitates Steel slabs with great level of cleanliness which is of prime importance in Plate Rolling. There are stringent requirements in special plates like low sulphur, low hydrogen and low phosphorus level. All these stringent requirements we are able to meet.

There are very stringent products that require two/three cycles of post heat treatment cycles. All those kind of sim-ulation mini mills do not do and let cus-tomers do at their end that causes lot of rejections at customer end. We have built that capability so that customer gets 100% plates for their application.

We have an excellent accelerated cooling system called ADCO System in which water and air is mixed and mist is used to control the cooling. This enables very stringent cooling.

Our main USP is our highly motivated and committed team having double positive attitude. You need smart team to handle smarter equipment. We work with our customers as our partners. We salute their trust and confidence in us.

SM: All our products are supplied through international and local stan-dards, at par with bench marking mill worldwide. We do execute orders where customer requirements are more strin-gent than these. We have BIS, IBR Cer-tifications. We maintain other require-ments from approving agencies such as API Monogram, additional specification requirement from local governments.

SM: As we are migrating to value add-ed products, we require value added slabs. These require very stringent con-trols. We want to source all these from our own Melting Shops, we call Mother Plant. For non-value added grades like base grade we do source from market.

SM: We already have Level 3. We have Level 2 in our operations, we have Level 1 in control of equipment. Mat-ter of fact, Essar Steel was the first to implement ERP System that is SAP. Level 3 system works as Business sys-tem where total integration takes place at business level that is order receipt from customer till it is fully delivered. We use this system at Global level, inte-grating all our offices across the globe.

SM: We have branded most of our high end products such as Essar Rockstar for Hardened plates through Q&T route, Essar Thermor for Boiler & Pres-sure Vessels, Essar Structor for High strength structural, Essar Fluidor for Line Pipe and for Sour Service it is Es-sar Acidor, and Ship building plates are branded asEssar Shipor. Similarly we have plates branded for very special-ized applications such as for penstock of Hydro Electric power plants Essar Penstor, for Large and high strength industrial fans its Essar Fanor. While our Q&T product has picked up brand name, we need to do a lot to popular-ize other by brand name. Customers generally use International grade name ue to global use and project licencing.

SM: This fiscal only we have made a good achievement as far as reduction in energy consumption is concerned. This is regarding furnace gas and we have optimized the heating cycles. Technol-ogy and process are important here. Technology enables you to optimize and second is the process in which you have to heat with the right parameters. So process design is very important and then there is capacity utilization.

Capacity utilization helps heavy mills like plate mill in big way. We want to benchmark and lead bench-marking parameters. In this regard, we have launched various initia-tives involving each and every team member through innovative ideas.

NM: What will you regard as the USP of your mill?

NM: In terms of automa-tion level, Essar Steel is still at level 2. Is there a plan to integrate with Level 3?

NM: How much of your prod-ucts are branded?

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We Want to Build Our Expertise on the Very Large Diameter Spiral Pipes

NM: Your estimate is that over a period of two years the large dia pipe market will be over a million tonne?

NM: Can you highlight the re-cent major orders in your kitty?

NM: What kind of figure are you going to achieve in terms of tonnage this fiscal?

NM: By when do you expect to get your rated capacity?

HSB: As I was telling you, on the domes-tic front we want to build our expertise on the very large diameter Spiral pipes.For 3 meter diameter pipe required in Sauni project, we modified both the Spiral machines for manufactur-ing these pipes and also modified Coating Plants both external and in-ternal to coat these 3 meter diameter pipes. These pipes require external coating with 3 layer PE and internal

HSB: This fiscal we are going to end with a figure of 2.5 lac tonnes. Next fiscal we are going to increase to

HSB: To take the plant to capacity pro-duction one needs order in hand for at least six months. We have only one Coating plant and three units for bare pipe manufacturing. As per capacity of coating Plant we are booked for full year. We are going to build up one more Coating plant in the same premises so as to run all the three pipe manufactur-ing units to the fullest capacity. For ex-ample, Sauni had a total requirement of about 6 lacTon of pipes and we are sat-isfied with an order of only 1.2 lac Ton as per our single coating plant capacity.

As far as API sector is concerned there are hardly any new projects an-nounced in the domestic market. How-ever we have been able to get orders in small tonnages having many sizes from Reliance for their new refin-ery and kept ourselves busy. These pipes arein ASTM grades and need heat treatment in addition. In the last fiscal we have had 180 km of or-ders from Reliance worth 350 crore.

HSB: Pipe market is divided into domes-tic and international market. Domestic market isfurther divided into two parts , oil & gas and water. For water line seg-ment mostly the requirement nowadays is for very large diameter and the same is produced as Spiral pipes. These pipes are formed on a special machine set at a helical angle so as get the desired di-ameter. These forming machines can make different diameter from one width just by changing the helical angle

For spiral pipes material can be stocked in various standard thickness like 8mm,

10 mm, 12 mm and 17.5 mm. In the re-cent times there has been increase in the demand of spiral pipes as lot of projects in the water segment have already been awarded for execution. There has not been much demand for the spiral pipes due to recession in the requirement of pipes for Hydrocarbon .Many spiral mills have been put up in India in recent times. About 10 years back GAIL approved the use of Spiral pipes for Natural Gas transportation also. GAIL and EIL both confirmed the performance of spiral pipes equal to that of Long Seam pipes. As per them there is no distinct difference between the qualities of both type of pipes.

API requirement diminished in the country in the last 4-5 years be-cause no new projects from GSPL, GAIL, ONGC were in the market. This year GSPL which was supposed to lay 1200 km pipe line could not start due to lack of funds and approvals.

coting with food grain epoxy.ESSAR has always an edge over other pipe manufacturers as it has its own coils.

Speaking to Steel & Metallurgy, Essar Steel Pipe Mill CEO, Mr. H. S. Bedi Discusses how the Mill is Gearing up to Cater to the Growing Pipeline Projects Worldwide.

Mr H S Bedi, CEO, pipe mill, Essar Steel India

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400,000Tonnes . Out of this 180,000T would be from overseas and in API grade. To achieve this we are put-ting up another coating plant which is likely to be ready by end march 2015.

NM: Against your rated nameplate capacity of 100, you have raised your capac-ity to 134. So, if you could just highlight what are the internal modifications you made to your equipment?

NM: How much of exports do you target tonnage wise in the next fiscal?

NM: Depending on the mar-ket demand next fiscal can you go beyond the nameplate capacity?

NM: Will your new coating mill entail any additional ca-pex or that is accounted for?

NM: In terms of testing fa-cility what is your USP?

NM: Is there any other new grade that you are concen-trating?

NM: In the next fiscal is there plan to add any other facility within the mill as you are ex-pecting demand to rebound?

NM: In terms of price realiza-tion how would you compare the domestic market pricing and the international pricing?

HSB: Our spiral mill are 2 meter wide and have helical angle range from 15 degree to 85 degree and the pipes can be formed to 135. One needs to modify all the structure to accom-modate this large diameter. Major modification is involved are in the Submerged arc welding stations and handling equipment. Further Bevel-ling and Hydrotesting machines have also been modifiedto process these large diameters. New shot blasting station has been put up in the exter-nal coating plant besides modification in the Induction unit, Epoxy booth and high density Polythene Extruder.

HSB: Next fiscal around 1,80,000 tonnes out of 4,00,000 tonnes will be for exports.

HSB: We have total capacity of 6,00,000 tonnes for LSAW and spiral pipes both. Utilization of capacity is depen-denton the number of project s and size of pipes involved in the project. We have atargetto produce 4,00, 000 tonnes of pipes in the next fiscal year.

Our motto is to move to the value add-ed segment from the commodity mar-ket. We developed and modified both the spiral mills to manufacture pipes in diameter more than 3 meter and also modified the external and internal coating plants to carry 3 layer PE and food grain epoxy coatingrespective-ly of these pipes. Also we increased our range of manufacturing pipes in LSAW to 20x 34mm X-70 grade.

HSB: The capex would be in the range of 70 to 80 crore. We have started the civil work etc and it will be available for production in the next fiscal only.

HSB: All the pipes are Hydro tested to the desired pressure as per require-ment. Further we are also equipped with state of the art Laboratory for testing mechanical and chemical properties of Raw material like steel plate/coils, welding consumable, coat-ing materials etci We have also a very special Lab called NACE LAB meant fortesting HIC and SSC for sour grade

HSB: In the next fiscal we are concentrating onprojects requiring pipes in high strength, sour grade,and high wall thickness.

HSB: In terms of price realization over-seas market is more conducive because of less competitors. We have been able to develop ESSAR brand in Quality and fast delivery and have been favourites of many important customers. ESSAR is always preferred over others if pipes are required for critical application and if these are to be delivered in short time We are targeting to reduce our spot market and increase overseas market presence for not only API pipes but also for water pipes. We have recently re-ceived order from Tanzania for a water project and have already shipped 3500 tonnes of externally and internally coat

steel. We are successful in develop-ing pipes in small diameter say 18 to 20 and high wall thickness meant for sour gas transportation. In fact we are the only pipe mill in the country to have APIQ monogram for this purpose.

HSB: The demand for pipes for deep sea water is going to increase. These pipes need heavy weight coating which is called concrete coating. To get our share in this market we would add concrete coating mill at the earli-est.We being in the proximity of our port at Hazira has an added advantage as the heavy weight pipes need to be transported to the pipe lay barges.

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HSB: Iraq is our focus country where we have already been qualified by SCOP and are the only Indian pipe company permitted to use our own steel in man-ufacturing pipes for critical application. Recently we have Supplied pipes in X-70 GRADE to SCOP using ESSAR PLATE and won appreciation from them.

We are also trying to focus on Nige-ria and Algeria. Later we have plan to focus on US market. All the ma-jor players like Welspun, Jindal were saturated with orders in USA. So this signals a very promising market for Essar to win the new future projects

NM: In terms of OEM approval from oil companies and engi-neering companies, what kind of approvals do you have?

NM: In terms of automation what kind of automation level are you at?

NM: In terms customer re-lations management, many pipe makers adopt monitor-ing or tracking status of or-ders. Do you provide any such service?

NM: So according to you wa-ter pipe market is bright while the API market diminishing.

NM: To meet your coil require-ments, would it be complete-ly sourced from your mother plant or you can source from outside?

NM: The Pipe Mill is SBU of the company but it has to buy material at the market price or it does not receive any advantage in terms of price. Does it impact your margins?

HSB: We have OEM approvals from al-most all oil companies. We are the only company who have obtained APIQ li-cense using Quench and Tempered plates for manufacturing special grade pipes. This process is needed to pro-duce small diameter and high wall thick-ness sour grade pipes in high strength. We have got the licence APIQ to pro-duce pipes using this process route.

HSB: We are at level 2 automation sys-tem and do not require upgradation right now in pipe mill. Besides steel plate/ coils, we require special welding consumables, inserts formachining of the plates, lubricating oils etc. These in-ventories are well managed with level 2

HSB: API has a special system known as Q1 and calls for contract review. We are audited by API surveyor every six months for the Q1 system. As soon as an order is booked, the order execution cell gets in touch with the customer and starts the project with the acceptance of order. Daily progress report of the order is sent to the customers and prog-ress of the job is monitored very closely. The project is delivered on time to the complete satisfaction of the customer.

HSB: Because of the dipping crude oil pric-es, I dont see any major projects in next two three years for lack of viability. But keeping in mind our PMs promise to the eastern region of the country for supply of gas, I hope funds problem will be sort-ed out for Haldia-Jagdish Pur pipeline. HSB: We would prefer to source the

HSB: We buy the material from Es-sar at the market price We have the freedom to buy the steel from any mill in India or overseas. We can pro-cure coils /plates from overseas market to have maximum margins.

NM: Which are your focus countries?

ed pipes for this project. Total quantity of the order is 20,000 tonnes and have to be delivered within this fiscal year.

Freight becomes a major factor in accepting a project. Pipes in diam-eter more than 56 fetch a very high freight and becomes un viable to execute if the project site is far of.

coils from our own plant only and we need not build inventory while execut-ing a project. We have recently sourced material from Chinafor API grade as our plant has been busy in other work. For water projects we need steel with BIS certified and for that we would like to depend on our own plant. Only for API requirement if our own plant is busy we may have to look for sourcing coils / plates from outside . We procure coils/plates from our Mill on monthly basis.

systems. Besides, these cannot be fully controlled from automation platforms because with changes in pipe size and grades we need different consumables. Some times projects having different specifications need special requirements.

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We not Only Developed Innovative Products, We Created Innovative Applications

Speaking to Steel & Metallurgy Mr. M. Venkatraman, Sr. Vice President & Head, R&D Essar Steel India Ltd. states how Essar Steel has been pioneering not only new products, but also new steel applications in the cuntry. Which places the company ahead of other steel producers.

NM: Primarily what product mix have you developed re-cently? And what are the new grades we can expect in the coming fiscal?MV: Earlier, Essar Steel was like any other steel producers known for its quality product of hot rolled distinct. Essar Steel was having a monopoly on the line pipe grade and hot rolled product for general segment. The general feedback was the quality was good. Subsequently, cold rolling was added to its Hazira complex. Then other facilities like secondary refining like vacuum degassing, RH degasser which are clean steelmaking technol-ogy were augmented. This change in scenario of the steel product expanded the product to a wide spectrum. Paral-

lelly, the auto industry was also gaining momentum in India and was trying to establish one of the hubs. The growth of the auto industry was in tune with steel company also. That is why our thrust on application was emphasized.

So we took it consciously that we must enhance product basket in order to be strategically competitive in the market and for sustainability. So, the initiative started when the auto industry was gaining momentum and cold rolling mill was commissioned. So, every move Es-sar Steel made in product development segment happened to be the first move in India. Even Tata Motors used our product before they started producing the grade. The one was bake hardening steel with high strength which was a first attempt by Essar. Later it was copied by othersthrough reverse engineering and then dent resistant steel was devel-oped and extra low carbon steel which was possible through RH degasser.

We then developed crash resistant steel. We made leadership in auto-motive industry. Parallelly, the plate mill got commissioned and our lead-ership was established. Then our compact mill also got commissioned.

The distinction of Essar with other steel producers in India is that it has all down stream value added facilities to pro-duce products like coated, galvanized, hot rolled, cold rolled, pipes, plates in

all the ranges. And within each category we have sub category of product mix. In coated product we will introduce super coats and cool steel which will keep radiation out. After this the construction industry was also booming. Therefore there was large demand for earth moving equip-ment, cranes, tippers and dumpers. This needed wear resistant steel.

There were no technology providers for the new grades. Being specialized steel producer for specialized segment, we cannot buy technical know-how. Know-why is our R&D job and know why is translating that into know-how. Both of these are conducted in Essar without paying a single penny.

Essar Steel developed for the first time in India the steel for crane of 20 tonne load capacity. We have de-veloped grade with a strength 700 MPa for long members of truck with a weight saving potential of 17%. We then immediately launched spe-cial steel for boiler quality segment with creep resistance. Then we pro-posed launching of extra wide plates.

We then developed 1700 MPa ballistic steels for Defence . The development of weight saving, fuel saving and energy saving steel was a tremendous boost to plate mill focus. In the last 3 years we have produced over 120 products.

Mr. M. Venkatraman, Sr. Vice President & Head, R&D Essar Steel India Ltd.

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NM: Why have Indian steel producers not thought of pro-ducing electric grades steel?

NM: Do you think the use of flat products should increase in construction like cladding, and also in road barriers?

NM: Which are the areas where Essar Steel would make a foray in the next 2-3 years where new application can be introduced?

NM: What are the emerging areas in steel world?

MV: It is not that Indian producers do not have the technological know-how to produce electric steel. We are pro-ducing 5 types of extra low carbon sili-con gardecarbon electrical steel( Non Grain oriented). We import Grian ori-ented electrical steels. However, it is the market demand for this grade vis a-vis justification of the investment.

MV: Selling steel is not strategic sur-vival. It is selling steel solution. First we have made efforts to offer steel solu-tions in India prior to any other steel producers. Steel solution is important not only strategic for survival but for selling steel because if you are going to increase production, then we need to create parallel demand for consump-tion. One model can be adopted is Chi-na. They put in a balancing act. Both the urban and rural population matched in steel consumption. We in India have got a huge disparity here; in urban the con-sumption is 45-50 kgs per person and rural consumption is 6-7 kg per person. The government should make steel in-

MV: We would like to focus on defense, construction, coating, energy and auto-mobiles.

We are prepared to face any chal-lenges that we will encounter in terms of material threat due to replacement with other metals or in terms of to-tally radical products that are going to come to India through imports.

MV: One important emerging area is nano steel. This nano steel is a new revolution where Japanese have put in billion of dollars. This nano steel is very high strength steel but the cost is very less. Nano coating, nano tubes of carbon coated on the steel which is corrosion resistant are new emerging areas. Japan has produced this nano steel. USA has produced this grade, though they are selling it in small amount to the domestic car makers.

This nano steel gives wide range of new applications which has tre

tensive building, bridges, and roads. It is also time effective. Ministry of Road should be aware of the advantages of steel. The myths related to steel in public and buildings are that steel con-struction are expensive and they are corrosion prone so cannot last for ages which is a custom in Indian society. To-day we have all weather corrosion resis-tant coated steel which is for life long. In construction it increases the floor space index and is less time consuming.

One important thing is that in oth-er countries extreme weather has led to the use of steel consumption growth as a necessity but in India as all weathers is conducive, there is no real necessity or urge for steel usage.

Obviously, legislation can play a big role here. For example, China has banned loading labours with more than 50 kgs of weight through legislature which has led to the use of steel cart as load car-rier. The model can be applied in India even more successfully. Also, there is scope in pandals, steel scaffoldings.

One important aspect is that rivers in our country from where huge amount of sand is mined. If it is banned builders will move to the steel. Cement poses health hazards for workers whereas steel has no such issues and it is also

Providing quality product is matter of past. Today if any steel producer says it provides quality product, it has problem with the process be-cause with the technology at hand, quality is not the last word. We at Es-sar believe in providing not only what you require but we develop prod-ucts that exceed the user needs.

Its like one step ahead with provid-ing what the customers have not even anticipated. So, through our application engineering and R&D.

less time consuming. Health Minis-try should promote this awareness.

Corporate Office:

Balkrishna Ind. Ltd.

BKT House, C/15, Trade World,

Kamala Mills Compound,

Senapati Bapat Marg, Lower Parel,

Mumbai 400 013, India.

Tel: +91 22 6666-3800, Fax: +91 22 6666 3897/98

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NM: All major Indian steel producers have their research and development centres since long time separately but Essar Steel has no such cen-

NM: Lastly, in the last few years Essar Steel has devel-oped 300 products. How much of it is value added product?

MV: We do have an exclusive centre for R&D. We have a separate council of ex-perts who are working on it. We do not believe in having a centre just for name-sake or ornamental purpose. You have raised the issue that they have separate units for decades but they have used the units for incremental practice in their existing operations and equipment. But according to us R&D is putting your acumen to make breakthrough and Es-sar Steel has done that more than any other steel producers. We research

MV: We have presently 30-35 per of these as value added products. However, we have plan to take it to 50 per cent and then 70 per cent in future. We want to be a market leader in niche segment and value added segment. We dont want to compete in commodity segment.

NM: About your R&D, are you only focussed on day to day issues?

NM: What are your views on steel being improted in the country? Do we import be-cause of technical limitations?

NM: your Views on Exports...?

MV: We are open to new research and we have tie-ups with foreign and Indian uni-versities and we will come up with new solutions. We keep up global standards.

MV: As far as imports are concerned, I keep on telling Ministry in every forum that there is no imported steel grades that cannot be produced indigenously. Some special gardes need to improtes still bacuse the quantities required does not make out a business case or special facilities required. For example, army ambulances thin plates with armour-resistence in 2 to 4 mm sheet is which is still improted. The 2to 4 mm sheet for armoured personal carriers such as ambulances is produced through spe-cial quenching tempered technology. so here come the question of imports.

So unless the demand is there the investment cannot be justified be-cause steel companies have to see techno-economic viability to produce all grades currently being imported.

mendous potential to replace alu-miniu

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