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CHAPTER 4

PROFILE OF SELECT STEEL PLANTS AND

QUALITY OF WORK LIFE

4.1 Introduction

India‟s economic growth is contingent upon the growth of the Indian steel

industry. Consumption of steel is taken to be an indicator of economic development.

While steel continues to have a stronghold in traditional sectors such as construction,

housing and ground transportation, special steels are increasingly used in engineering

industries such as power generation, petrochemicals and fertilizers. India occupies a

central position on the global steel map, with the establishment of new state-of-the-art

steel mills, acquisition of global scale capacities by players, continuous modernization

and up gradation of older plants, improving energy efficiency and backward

integration into global raw material sources.

Steel is manufactured as a globally tradable product with no major trade

barriers across national boundaries to be seen currently. There is also no inherent

resource related constraints which may significantly affect production of the same or

its capacity creation to respond to demand increases in the global market. Even the

government policy restrictions have been negligible worldwide and even if there are

any the same to respond to specific conditions in the market and have always been

temporary. Therefore, the industry in general and at a global level is unlikely to

throw up substantive competition issues in any national policy framework. Further,

there are no natural monopoly characteristics in steel. Therefore, one may not expect

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complex competition issues as those witnessed in industries like telecom, electricity,

natural gas, oil, etc.,

This, however, does not mean that there is no relevant or serious competition

issue in the steel industry. The growing consolidation in the steel industry worldwide

through mergers and acquisitions has already thrown up several significant concerns.

The fact that internationally steel has always been an oligopolistic industry sometimes

has raised concerns about the anticompetitive behaviors of large firms that dominate

this industry. On the other hand the set of large firms that characterize the industry

has been changing over time.

Trade and other government policies have significant bearing on competition

issues. Matters of subsidies, non-tariff barriers to trade, discriminatory customs duty

(on exports and imports) etc., may bring in significant distortions in the domestic

market and in the process alter the competitive positioning of individual players in the

market. The specific role of the state in creating market distortion and thereby the

competitive condition in the market is a well-known issue in this country.

The Indian steel industry is more than 100 years old now. Till 1990, it

operated under a regulated environment with insulated markets and large-scale

capacities reserved for the public sector. Production and prices were determined and

regulated by the Government. Steel Authority of India Limited (SAIL) and Tata Steel

were the main producers, the latter being the only private player. The industry took its

first faltering steps in 1907 with the setup of the first integrated steel plant in

Jamshedpur by TISCO. Since, then the Indian steel industry has emerged as one of

the core sectors in the Indian economy with a very significant impact on economic

growth.

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India with its abundant availability of high grade iron ore, the requisite

technical base and cheap skilled labour is thus well placed for the development of

steel industry and to provide a strong manufacturing base for the metallurgical

industries. Companies in more mature industrial countries like India are increasingly

forced to look to assets (and growth) by setting up production operations (steel plants)

in key developing economies that places them close to natural resource supplies (both

in terms of inputs and energy).

The liberalization of industrial policy and other initiatives taken by the

Government have given a definite impetus for entry, participation and growth of the

private sector in the steel industry. While the existing units are being modernized /

expanded, a large number of new / Greenfield steel plants have also come up in

different parts of the country based on modern, cost effective, state of-the-art

technologies.

4.2 Steel Industry in India: Background

The establishment of Tata Iron and Steel Company (TISCO) in 1907 was the

starting point of modern Indian steel industry. Afterwards a few more steel

companies were established namely Mysore Iron and Steel Company, (later renamed

as Vivesvaraya Iron and Steel Ltd.) in 1923; Steel Corporation of Bengal (later

renamed as Martin Burn Ltd and Indian Iron and Steel Ltd.) in 1923; and Steel

Corporation of Bengal (later renamed Martin Burn Ltd and Indian Iron and Steel

Company in 1939. All these companies were in the private sector.

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4.2.1 Key Events in Steel Industry in India

1907* Tata Iron and Steel Company set up.

1913 Production of steel begins in India.

1918 The Indian Iron and Steel Co. set up by Burn and Company to compete with

Tata Iron and Steel Company

1923* Mysore Iron and Steel Company set up

1939* Steel Corporation of Bengal set up

1948 A new Industrial Policy Statement states that new ventures in the iron and

steel industry are to be undertaken only by the central government.

1954 Hindustan Steel is created to oversee the Rourkela plant.

1959 Hindustan Steel is responsible for two more plants in Bhilai and Durgapur.

1964 Bokaro Steel Ltd. is created.

1973 The Steel Authority of India Ltd. (SAIL) is created as a holding company to

oversee most of India's iron and steel production.

1989 SAIL acquired Vivesvaraya Iron and Steel Ltd.

1993 India sets plans in motion to partially privatize SAIL.

Source : These information* were sourced from Government of India, Joint Plant Committee Report 2007, rest of

the dates sourced from:http://www.fundinguniverse.com/company-histories/Steel-Authority-of-India- Ltd- company-History.html

At the time of independence, India had a small Iron and Steel industry with

production of about a million tonnes (MT). In due course, the government was

mainly focusing on developing basic steel industry, where crude steel constituted a

major part of the total steel production. Many public sector units were established

and thus public sector had a dominant share in the steel production till early 1990s.

Mostly private players were in downstream production, which was mainly producing

finished steel using crude steel products. Capacity ceiling measures were introduced.

When economic liberalization reforms were introduced, the steel industry

continued to be under controlled regime, which largely constituted regulations such as

large plant capacities were reserved only for public sector under capacity control

measures; price regulation; for additional capacity creation producers had to take

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license from the government; foreign investment was restricted; and there were

restrictions on imports as well as exports.

The Indian steel industry is now globally acknowledged for its product quality.

As it traversed its long history during the past 61 years, the Indian steel industry has

responded to the challenges of the highs and lows of business cycles. The first major

change came during the first three Five-Year Plans (1952-1970) when in line with the

economic order of the day, the iron and steel industry was earmarked for state control.

From the mid-50s to the early 1970s, the Government of India set up large integrated

steel plants in the public sector at Bhilai, Durgapur, Rourkela and Bokaro. The policy

regime governing the industry during these years involved: 1) Capacity control

measures: Licensing of capacity, reservation of large-scale capacity creation for the

public sector units; 2) A dual-pricing system: Price and distribution control for the

integrated, large-scale producers in both the private and public sectors, while the rest

of the industry operated in a free market. 3) Quantitative restrictions and high tariff

barriers. 4) Railway freight equalization policy: To ensure balanced regional

industrial growth and 5) Controls on imports of inputs, including technology, capital

goods and mobilization of finances and exports.

The system, thereafter, underwent marked changes. For steel makers, opening

up of the economy opened up new channels of procuring their inputs at competitive

rates from overseas markets and also ensured new markets for their products. It also

led to greater access to information on global operations/techniques in manufacturing.

This, along with the pressures of a competitive global market, increased the need to

enhance efficiency levels so as to become internationally competitive. The steel

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consumer, on the other hand, was now able to choose items from an array of goods,

be it indigenously manufactured or imported.

This freedom to choose established the sovereignty of the consumer and

galvanized steel producers to provide products/service levels in tune with the needs of

the consumers. With the opening up of the economy in 1992, the country experienced

rapid growth in steel making capacity. Large integrated steel plants were set up in the

Private Sector by Essar Steel, Ispat Industries, Jindal Group etc., Tata Steel also

expanded its capacity. Some of the notable milestones in the period were:

1) Emergence of the private sector with the creation of around 9 MT of steel capacity

based on state-of-the art technology, and 2) Reduction/ dismantling of tariff barriers,

partial float of the rupee on trade account, access to best-practice of global

technologies and consequent reduction in costs - all these enhanced the international

competitiveness of Indian steel in the world export market.

After 1996-97, with the steady decline in the domestic economy's growth rate,

the Indian steel industry's pace of growth slowed down in terms of all the performance

indicators - capacity creation, production, consumption, exports and price/

profitability - the performance of the industry fell below average. In foreign trade,

Indian steel was also subjected to anti-dumping / safeguard duties as most developed

economies invoked non-tariff barriers. Economic devastation caused by the Asian

financial crisis, slowdown of the global economy and the impact of glut created by

additional supplies from the newly steel-active countries (the steel-surplus economies

of erstwhile USSR) were the factors that pulled down growth levels.

However, from the year 2002, the global industry turned around, helped to a

great extent by China, whose spectacular economic growth and rapidly-expanding

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infrastructure led to soaring demand for steel, for which its domestic supply could not

meet. At the same time, recoveries in major markets took place, reflected by increase

in production, recovery of prices, return of profitability, emergence of new markets,

lifting of trade barriers and finally, rise in steel demand - globally. The situation was

no different for the Indian steel industry, which by now had acquired a degree of

maturity, with emphasis on intensive R&D activities, adoption of measures to

increase domestic per capita steel consumption and other market development

projects, import substitution measures, thrust on export promotion and exploring

global avenues to fulfill input requirements.

The rapid pace of growth of the industry and the observed market trends called

for certain guidelines and framework. Thus was born the concept of the “National

Steel Policy”, with the aim to provide a roadmap of growth and development for the

Indian steel industry. The National Steel Policy (NSP) was announced in November

2005 as a basic blueprint for the growth of a self-reliant and globally competitive steel

sector. The long-term objective of the National Steel Policy is to ensure that India has

a modern and efficient steel industry of world standards, catering to diversified steel

demand.

The focus of the policy is to attain levels of global competitiveness in terms of

global benchmarks of efficiency and productivity. The National Steel Policy seeks to

facilitate removal of procedural and policy bottlenecks that affect the availability of

production inputs, increased investment in research and development, and creation of

road, railway and port infrastructure. The Policy focuses on the domestic sector, but

also envisages a steel industry growing faster than domestic consumption, which will

enable export opportunities to be realized.

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4.2.2 Production, Consumption and Growth of Steel Industry in

India

The National Steel Policy 2005 had projected consumption to grow at 7 per

cent based on a GDP growth rate of 7-7.5 per cent and production of 110 million

tonne by 2019-20. These estimates will be largely exceeded and it has been assessed

that, on a 'most likely scenario' basis, the crude steel production capacity in the

country by the year 2011-12 will be nearly 124 million tonne.

The Table 4.1 shows the trend in production for sale, import, export and

consumption of total finished steel (alloy +non-alloy), and highlights the contribution

of the private and public sector in crude steel production in the country:

Table 4.1 Production of Steel in Public Sector and Private Sector in India

Year

Total finished steel ( alloy + non-

alloy) (‘000 tonne)

Indian Crude Steel Production ( in million tonne)

Produ ction

for

sale

Im-

port

Ex-

port

Consum

ption

Sector

2005-

06

2006-

07

2007-

08

2008-

09

2009-10*

(April-

Dec.)

2004-05 43153 2293 4705 36377 Public Sector 16,964 17,003 17,091 16,372 12,483

2005-06 46566 4305 4801 41433 Private Sector 29,496 33,814 36,766 42,065 33,292

2006-07

52529

4927

5242

46783 Total

Production

46,460

50,817

53,857

58,437

45,775

2007-08

56075

7029

5077

52125 % share of Public Sector

36.5

33.5

32

28

27

2008-09

57164

5841

4437

52351 % share of Private Sector

63.5

66.5

68

72

73

Apr-Dec 2009-10*

43849

5210

2099

40997

Source: Steel Ministry Annual Report 2009-2010, p.13 and p.19

4.2.3 Trends in Production, Private / Public Sector

Traditionally, Indian steel industry has been classified into Main Producers

(SAIL Plants, Tata Steel and Vizag Steel / RINL), Major Producers (plants with crude

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steel making capacity above 0.5 million tonne - Essar Steel, JSW Steel, Jindal Steel

and Power and Ispat Industries) and Other Producers. The latter comprises of

numerous steel making plants producing crude steel/finished steel (long product/flat

product)/ pig iron/ sponge iron and are spread across the different states of the country

4.3 Global Scenario of Steel

International steel sector is reflecting the global trends in business

environment. The early years of the 21st

century have set the pattern for the future.

Asia has increased its share of production. Although consumption of steel is likely to

increase in most regions of the world in the medium term, growth in industrialized

nations is likely to be much slower than the average growth in demand across the

world. Developing countries and the emerging economies are likely to have the

fastest rate of growth in steel demand in the future.

In the developed world, the EU is expected to experience stagnant demand in

the medium term, while the NAFTA block is likely to see low positive growth in

consumption. In Japan, demand for steel has steadily declined in recent years due to

restrictions on Government spending in construction projects as well as weak

consumer demand. A modest growth is anticipated in the manufacturing and building

sectors as the economic performance improves. However, the medium term

projection is for a reduction in overall steel consumption in Japan.

Amongst the developing economies, China requires special mention. China‟s

apparent consumption of finished steel during 1996 was 97 million tonne, which

amounted to around 15 per cent of world finished steel consumption. However, by

the year 2007, China‟s consumption figure reached a staggering 310 million tonne,

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accounting for around 30 per cent of the total world finished steel consumption.

China‟s steel consumption is still growing at a fast pace and as per IISI estimates; the

steel production of China during 2009-10 was 573.6 million tones which is 46.7 per

cent of the total steel production of the world.

Table 4.2 World Steel Production 2009 Figure 4.1 Share of World Crude

Steel Production 2009

Rank

Country Production

(MT)

1 China 573.6

2 Japan 87.5

3 Russia 60.0

4 US 58.2

5 INDIA 56.6

6 South Korea 48.6

7 Germany 32.7

8 Ukraine 29.9

9 Brazil 26.5

10 Turkey 25.3

Source: http://www.worldsteel.org/?action=newsdetail&id=319

Finished steel consumption in the world has crossed a billion tonne in 2005.

However, despite the growth in consumption there are apprehensions of excess

production as compared to global demand. As per the estimates by the World Steel

Dynamics (WSD), world finished steel production, which stands today at more than

1 billion tonne a year, is expected to cross 1.5 billion tonne by 2012.

Global crude steel production reached 1220 million tonne in 2009, a decline of

8 per cent over 2008. China was the largest crude steel producer in the world with

production reaching 573.6 million tonne, a growth of 13.5 per cent over 2008. India

once again emerged as the fifth largest producer in 2009 and recorded a growth of 2.7

per cent as compared to 2008, the only other country in the top 10 bracket to register a

positive growth during 2009. India also emerged as the largest sponge iron producing

country in the world in 2009, a rank it has held on since 2002. If proposed expansions

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plans are implemented as per schedule, India may become the second largest crude

steel producer in the world by 2015-16.

4.3.1 Global Ranking of Indian Steel

India was the fifth largest producer of crude steel in the world in 2009, based

on rankings released by World Steel Association. Domestic crude steel production

grew at a compounded annual growth rate of 8.6 per cent during 2004- 05 to 2008-09.

This growth was driven by both capacity expansion (from 47.99 million tonne in

2004-05 to 66.343 million tonne in 2008-09) and improved capacity utilization.

India, the world's largest producer of direct reduced iron (DRI) or sponge iron, is also

expected to maintain its lead in the near future. Sponge iron production grew at a

CAGR of 11 per cent to reach a level of 21.09 million tonne in 2008-09 compared to

12.54 million tonne in 2004-05. India is expected to become the second largest

producer of steel in the world by 2015-16, provided all requirements for fresh

capacity creation are met.

Indian steel industry has just come out of the slowdown that affected its

performance during 2008-09. Domestically, 2009 ended on a relatively better and

encouraging note, with Central Statistics Office (CSO) reporting an overall

improvement of economic situation through its GDP data, which showed a robust 7.9

per cent growth during July-September 2009-10. For steel, this is of key importance

and the growth rates registered for leading end-use segments like manufacturing,

consumer durables, construction, the stable growth of the service sector and

agriculture sector spell good news. April-December 2009 provisional data released

by Joint Plant Committee (JPC) for steel indicates a 7.8 per cent rise in consumption

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of total finished steel. Globally also there are signs of improvement in economic

conditions and firming up of demand and prices.

4.4 Steel Industry Structure in India

The iron and steel industry in India is organized in three categories‟ viz., main

producers, other major producers and the secondary producers. The main producers

and other major producers have integrated steel making facility with plant capacities

over 0.5 MT and utilize iron ore and coal/gas for production of steel. In 2004-05, the

main producers i.e., SAIL, TISCO and RINL had a combined capacity of around 19.3

MT and capacity utilization was 104 per cent. The other major producers comprising

of ESSAR, ISPAT and JSW had a capacity of 6.4 MT with capacity utilization of 97

per cent. The secondary sector includes sponge iron producers, mini blast furnaces,

electric arc furnaces, re-rollers etc., This sector has a production capacity of 32.7 MT

in 2004-05.

Steel production in India has increased by a compounded annual growth rate

(CAGR) of 8 per cent over the period 2002-03 to 2006-07. Going forward, growth in

India is projected to be higher than the world average, as the per capita consumption

of steel in India, at around 46 kg, is well below the world average (150 kg) and that of

developed countries (400 kg). Indian demand is projected to rise to 200 million tonne

by 2015. Given the strong demand scenario, most global steel players are into a

massive capacity expansion mode, either through Brownfield or Greenfield route. By

2012, the steel production capacity in India is expected to touch 124 million tonne and

275 million tonne by 2020. While Greenfield projects are slated to add 28.7 million

tonne, Brownfield expansions are estimated to add 40.5 million tonne to the existing

capacity of 55 million tonne.

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4.5 Steel Producers in India

Broadly there are two types of producers in India viz. integrated producers and

secondary producers. Integrated steel producers have traditionally integrated steel

units have captive plants for production of iron ore and coke, which are main inputs to

these units.

4.5.1 Public Sector Steel Producers

Currently there are two main integrated producers of steel in public sector

namely Steel Authority of India Limited (SAIL), and Rashtriya Ispat Nigam Ltd

(RINL). SAIL dominates amongst the public sector, owing to its large steel

production capacity plant size. The details of the units are listed in the Table 4.3.

Table 4.3 Steel Producers in Public Sector

Units of Steel Authority of

India Limited (SAIL)

Rashtriya Ispat Nigam

Limited (RINL)

Integrated Steel Plants

Bhilai Steel Plant, Bhilai, Chhattisgarh

Rourkela Steel Plant, Rourkela, Orissa

Durgapur Steel Plant, Durgapur, West Bengal

Bokaro Steel Plant, Bokaro, Jharkhand

Indian Iron & Steel Company Limited, Burnpur,

West Bengal

RINL has its

manufacturing unit at

Visakhapatnam, Andhra

Pradesh.

Special Steel Plants

Alloy Steels Plant, Durgapur, West Bengal

Salem Steel Plant, Tamil Nadu

Visvesvaraya Iron and Steel Plant, Bhadravathi,

Karnataka

Subsidiary Unit

Maharashtra Electrosmelt Limited, Chandrapur,

Maharastra Source : Annual Report 2009-2010, Ministry of Steel, Govt. of India.

Apart from the above manufacturing units, several ancillary units operate

under Ministry of Steel to look after the raw material supply for these units.

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4.5.2 Private Sector Steel Producers

The private sector of the Steel Industry is currently playing an important role

in production and growth of steel industry in the country. The private sector units

consist of both major steel producers on one hand and relatively smaller and medium

scale units such as Sponge iron plants, Mini Blast Furnace units, Electric Arc

Furnaces, Induction Furnaces, Re-rolling Mills, Cold-rolling Mills and Coating units

on the other. They not only play an important role in production of primary and

secondary steel, but also contribute substantial value addition in terms of quality,

innovation and cost effectiveness. Some of the major steel companies in private

sector are, 1) Tata Steel Limited, 2) JSW Steel Limited, 3) Jindal Steel & Power

Limited, 4) Essar Steel Limited, 5) Ispat Industries Limited, 6) Monnet Ispat &

Energy Limited, 7) Bhushan Power & Steel Limited, and 8) Bhushan Steel Limited.

(Source: Annual Report 2009-2010, Ministry of Steel, Government of India.)

4.6 Types of Steel and Products

Steel is an iron based mixture containing two or more metallic and/or non

metallic elements usually dissolving into each other when molten. It is an iron based

alloy which contains one or more other elements such as carbon, manganese, silicon,

nickel, lead, copper, chromium, etc., as per its end user requirements. Steel is

produced using Steel Melting Shop that includes converter, open hearth furnace,

electric arc furnace and electric induction furnace.

There are broadly two types of steel according to its composition: alloy steel

and non-alloy steel. Alloying steel is produced using alloying elements like

manganese, silicon, nickel, chromium, etc. Non-alloy steel has no alloying component

in it except that are normally present such as carbon. Non-alloy steel is mainly of

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three types, viz., mild steel (contains upto 0.3 per cent carbon), medium steel

(contains between 0.3 - 0.6 per cent carbon) and high steel (contains more than 0.6 per

cent carbon). All types of steel other than mild steel are called special steel. It is

mainly because a special care is taken in order to maintain particular level of chemical

composition in such steel. This process gives different properties to the steel

according to its composition. In India, non-alloying steel constitutes about 95 per cent

of total finished steel production, and mild steel has large share in it. According to

shape/size/form steel is categorized into different types such as liquid steel, ingots,

semis (semi-finished steel) and finished steel. Liquid steel is a first product that comes

out from Steel Melting Shop. Liquid steel further goes into ingots, and then ingots

advance to semis.

Semis are called semi-finished steel products because they are further

subjected to forging/rolling in order to produce finish steel products such as flat steel

products and long steel products. Crude steel generally includes ingots and semis.

According to end use, steel is categorized into structural steels, construction

steel, deep drawing Steel, forging quality, rail steel, etc., The following figure depicts

various types of steel products according to different categories.

Figure 4.2 Categories/Types of Steel Products

Source : Competition Commission of India Report, “Indian Steel Industry”, January 2009, p.6

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4.7 Human Resource in Steel Industry

Human Resource is considered as the asset to the organization.

Technological advances provide equal opportunity for learning to all, as the focus is

now more than ever evident on the human aspects of steel making. The key

differentiator to the success of an organization is its works force that makes things

happen.

Thrust on human resource development continues with a renewed focus on

inculcating a greater value orientation across the company. A series of initiatives are

being taken to improve the competence level of the employees in tune with changing

technologies, customer demands and market dynamics. Accordingly, training

modules have been redesigned with a clear focus on competence mapping, skill gap

analysis, multi-skilling and multitasking apart from imparting training on new

technologies of steel making. Efforts are also on to put a system in place to

institutionalize the sharing of knowledge among the employees.

Today‟s market is flourishing with new projects and investments in every field

of life, which calls for skilled manpower. Since, steel industry is a tough and rising to

work due to the conditions, the working environment, job hazards etc are more as

compared to the IT-industry offering a good salary and job profiles which is attracting

the engineers and professionals. Therefore, scarcity of skilled manpower is a burning

issue for most of the steel industries.

The anticipated finished steel production of 110 MT by 2020 would require an

additional workforce of 220,000 after accounting for the expected productivity

improvements. Further the creation of 1 man-year of employment in the steel industry

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generates an additional 3.5 man-years of employment elsewhere in the economy due

to its strong linkages with other sectors such as transport, mining, construction,

machinery, and steel fabrication. The total additional employment generated in the

economy due to expected production of 110 MT by 2020 would be around 1 million.

The profile of the required human resources will have a larger share of the skilled and

semi-skilled labour force.

4.8 Occupational Health and Safety

The question of occupational health need is gaining more attention in the

industry. Steel industry is notoriously known as a hazardous industry and workers are

exposed to several health hazards. The managements of steel plants have not been

paying sufficient attention to this aspect. There is an urgent need to identity these

health hazards and take preventive measures. Due to prolonged exposure of working

in hot conditions, noisy environment and vibration due to machines, workers are

facing several health hazards, which require urgent treatment. Gases emitted while

working in several departments also cause health problems for the workers.

4.9 Global Ranking of Select Steel Industries for the Study

Steel Authority of India Limited (SAIL) and JSW Steel Limited are the

leading manufacturers of steel in India. They rank 16th

and 34th

in the world‟s top steel

producers according to World Steel Association Report 2009.

119

Rank Company MMT

17 Handan 12.0

18 Riva 11.3

19 Sumitomo 11.0

20 ThyssenKrupp 11.0

21 Novolipetsk 10.9

22 IMIDRO 10.6

23 Magnitogorsk 9.6

24 China Steel 8.9

25 Laiwu 8.9

26 Hyundai 8.4

27 CELSA 7.8

28 Metinvest 7.4

29 Techint 6.9

30 Erdemir 6.5

31 Metalloinvest 6.5

32 Kobe 5.9

Rank Company MMT

33 Usiminas 5.6

34 JSW 5.5

35 Essar 5.5

36 Voestalpine 5.5

37 Salzgitter 4.9

38 Hadeed 4.8

39 BlueScope 4.6

40 CSN 4.4

41 Ezz 3.9

42 SSAB 3.6

43 Sidor 3.1

44 Duferco 3.1

45 Nisshin 3.1

46 Vizag 3.0

47 CMC 3.0

48 AHMSA 3.0

Table 4. 4 World Top Producers 2009 (Crude Steel)

Rank Company MMT

1 ArcelorMittal 77.5

2 Baosteel 31.3

3 POSCO 31.1

4 Nippon Steel 26.5

5 JFE 25.8

6 JiangsuShagang 20.5

7 Tata Steel 20.5

8 Ansteel 20.1

9 Severstal 16.7

10 Evraz 15.3

11 U.S. Steel 15.2

12 Shougang 15.1

13 Gerdau 14.2

14 Nucor 14.0

15 Wuhan 13.7 16 SAIL 13.5

Source: http://www.worldsteel.org/?action=programs&id=53 on 17.12.2010, 13:10 hrs

PROFILE OF SELECT STEEL PLANTS IN TAMIL NADU

UNDER PRESENT STUDY

4.10 Steel Authority of India Limited (SAIL)

The Steel Authority of India Limited (SAIL) is the largest producer of steel in

India and the 16th

largest producer of steel in the world. The company is among the

four Maharatnas of the country's Central Public Sector Enterprises. It has played a

major role in the country‟s transformation from an agrarian economy to an industrial

one. It has provided steel, the basic infrastructure resource of a growing nation. Its

vision for the future is:

To be a Respected World Class Corporation and the Leader in

Indian Steel Business in Quality, Productivity, Profitability and

Customer Satisfaction

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SAIL is a holding company whose major units are

Bhilai Steel Plant, Bhilai, Chhattisgarh

Rourkela Steel Plant, Rourkela, Orissa

Durgapur Steel Plant, Durgapur, West Bengal

Bokaro Steel Plant, Bokaro, Jharkhand and

Indian Iron & Steel Company Limited, Burnpur ,West Bengal

While the above are its major integrated steel plants which manufacture a

variety of mild steel products, it has three special steel plants and a subsidiary unit:

Alloy Steels Plant, Durgapur, West Bengal

Salem Steel Plant, Tamil Nadu

Visvesvaraya Iron & Steel Plant, Bhadravathi, Karnataka

SAIL also has a subsidiary unit: Maharashtra Electrosmelt Limited,

Chandrapur, Maharastra.

With a production capacity of over 12 million tonne (MT) of crude steel, Steel

Authority of India Limited (SAIL) is India‟s largest and among the leading steel

producers in the world. In 2009-2010 its turnover is `43,935.00 crores and net profit

of `6,790.00 crore. With this impressive performance the company also became debt

free.

The company is presently implementing a growth plan. The plan aims at

increasing hot metal production to around 26 MT and saleable steel to around 23 MT

by 2011-2012. This growth plan envisages an investment of around `60,000.00 crore.

The company also has the distinction of being India‟s largest producer of iron ore. In

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fact, owning India‟s largest mines network provides SAIL a competitive edge in terms

of captive availability of iron ore, limestone, dolomite, etc.,

Though primarily a domestic player, SAIL has established a reputation for

itself as a consistent and reliable supplier of world-class quality products in the

international market as well. SAIL products have been shipped to more than 75

countries of the world, including China, Japan, the US, European countries, South-

East Asia, etc.,

The SAIL Corporate Office in New Delhi manages and oversees this vast

business. Besides the SAIL Chairman‟s Secretariat, the Corporate Office houses all

the functional Directorates of the company, including Finance, Operations,

Commercial, Personnel and Projects. The Shareholding Pattern of SAIL is given

below:

Figure 4.3 Shareholding Pattern of SAIL (% of Equity)

4.37

0.39

0.11

4.23

1.17

0.05

3.86

85.82

Government of India (85.82%) Financial Institutions (4.37%)

Banks (0.11%) Mutual Funds (0.39%)

Foreign Institutional Investors (4.23%) Global Depository Receipts (0.05%)

Companies (including Trusts and clearing members (1.17%) Individuals (including Employees and NRIs) (3.86%)

Source: SAIL Annual Report 2009-2010.

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4.10.1 Human Resource in SAIL

SAIL always believe that human resource is most important resource and

continues to work for its development. The HRD activities focused on multi-skill

training and enhancement of managerial competencies. In order to remain cost

competitive, the ongoing thrust on rationalization of manpower with focus on proper

utilisation continued which inter-alia included implementation of Voluntary

Retirement Schemes in two spells. Manpower strength of SAIL as on 1st January,

2010 was 1, 17,000.

4.10.2 Salem Steel Plant- Profile

The Salem Steel Plant was established in the year 1973. Salem Steel Plant is a

world-class producer of stainless steel in India. The stainless steel coils and sheets that

are produced are characterized by their superior quality, precise dimensional

tolerances, high degree of flatness and attractive finishes. Its customer base spans

across many countries. The plant was commissioned on 13th

September 1981, with an

investment of around ̀ 180.00 crores.

The plant, as part of the reverse integration, added another Sendzimir Mill in

1991 at investment of `69.37 crores. A Blanking Line, the first of its kind in India,

was established in 1993, at a cost of `15.00 crores, at annual capacity to produce 3000

tonne of ferritic grade coin blanks or 3600 tonne of utility blanks. Coinage of `1 and

50 paise denominations are minted from the blanks supplied by SSP to the

Government Mint in Noida, Mumbai, Kolkata and Hyderabad. The Hot Rolling Mill

123

with a capacity of 1,86,000 tonne per annum was commissioned on 2nd

November

1995 with an investment of `623.00 crores.

Its products have become a household name „Salem Stainless‟ in the domestic

market and are widely exported; besides meeting the requirements of 100 per cent

export oriented units and free-trade zones in India. In hot rolled special grade carbon

steels, SSP has been recognized as a well-known manufacturer of boiler quality steel.

The Plant is also supplying LPG grade IS 6240 steel in sheet form.

The entire Plant is certified for

ISO: 9001:2008 Quality Management Systems

ISO: 14001:2004 Environmental Management Systems for its Plant and

Township

OSHAS 18001:2007 Occupational and Safety Health Assessment System and

ISO 8000: 2008 Social Accountability

SSP has revolutionized application of stainless steel in India both in

conventional and unconventional areas. Hi-tech industries like atomic power stations

prefer 'Salem Stainless'. It is also chosen in industrial sectors like dairy and food

processing, chemical and fertilizer, heavy engineering, railways, automobile, bulk

solid handling, power etc., The building and architecture segment, which is growing

at a rapid pace, sees 'Salem Stainless' as the most dependable companion.

In architecture, building and construction, the prestigious structure where

„Salem Stainless‟ was chosen include the Parliament House Library Complex, New

Delhi, the world‟s tallest twin buildings, the Petronas Twin-Towers, in Malaysia and

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the retractable roofing at the Melbourne Tennis Stadium, Australia. The coaches of

the high speed Jan Shatabdi Express trains are furnished with modular rail marts and

sub pantries made entirely of Salem Stainless. Korean blue resin coated corrugated

curved roofing of the Koparkhairane Railway Station and the copper tan shade-

coloured roofing of the Airoli railway station in Navi Mumbai is a trendsetter for

railways in India.

The expansion of Salem Steel Plant in to an integrated special steel plant as

envisaged in the SAIL Corporate Plan 2012 had become reality. The expansion

package comprises facilities like installation of Steel Melting facility, expansion of

Cold Rolling Mill capacity and installation of additional Grinding Machine at Hot

Rolling Mill.

The project is being implemented at an indicative cost of `1902.00 crores. The

Internal Rate of Return (IRR) is expected to be around 16.6 per cent with a payback

period of 7 years. The capacity addition will enable SSP to take advantage of the

growing global steel market. As on date the capital investment in the plant is to the

extent of `2,797.00 crores. The plant‟s capacity after expansion is listed in the Table

4.5.

Table 4.5 Production Capacity of Salem Steel Plant

Product

Before

Expansion

(Tones/annum)

After

Expansion

(Tones/annum)

Slabs --- 1,80,000

Hot Rolled Coils 1,86,000 3,64,000

Cold Rolled Stainless Steel (CRSS) 65,000 1,46,000

Saleable Steel 1,75,000 3,40,000

125

Source: Plant/ unit specific manual of Salem Steel Plant, June 2010, p.5.

126

4.10.3 Human Resource Development in Salem Steel Plant

In the era of the “Global Village” where the market place provides a level

playing field in terms of technology and resources, the cutting edge of competition is

the quality of employees of the organization. SSP believes that its greatest assets are

its human resources. The company employs about 1295 employees (as on

01.12.2009). As laid down in its quality policy, the company is committed to

continuously upgrade the knowledge and skill of its employees to maximize their

efficiency.

The company has a Human Resource Development Centre whose objective it

is to gear up the human resource through continual updation of their knowledge to

keep abreast of the technical and managerial developments and to build appropriate

and adequate competency and skill. There is a well laid our procedure for the training

need identification through which the annual training plan of the organization is

drawn – up.

The emphasis is on development of internal faculty on specialized areas and

dissemination of knowledge and skill through in-house training programmes. Nearly

90 per cent of employees are trained are through the in-house route. Only about 10

per cent are sent for external training programmes.

The lifeline of Salem Steel Plant is its vibrant, resilient and highly skilled

human resources. Creativity, innovation, and unstinted commitment are their hallmark

which manifested in surpassing the designed parameters of the equipment and product

and in winning accolades, be in the field of safety, productivity, environment

management, HRD initiatives, IR management etc. any organization grows on the

127

strength of creativity and innovations of its human resources. The employees of SSP

have always actively contributed to the challenges of improvement of work practices,

equipment performance and innovative solution and at the work place through the

Quality Circles and Suggestion Schemes. These activities have resulted in

considerable savings on cost, increased man-hour availability and enhanced efficiency

operations. Many of the employees have won awards for their innovations and their

singular contribution, from the State and Central Governments.

The work practices in Salem Steel have generated interest among sister units

of SAIL who send their personnel for training in SSP, to imbibe its work ethos.

Trainees from Yeih United Steel Corporation, Taiwan have also had a stint at SSP in

1994 as they were impressed with the quality of Plant operations and the people

behind it.

4.11 JSW Steel Limited- Profile

The Jindal group is a US $12 billion conglomerate, which over the last three

decades has emerged as one of India's most dynamic business groups. Founded in

1952 by O.P. Jindal, a first-generation entrepreneur, it is today a leading steel

producer, with interests spanning across the spectrum, from mining iron ore, to

manufacturing value-added steel products.

Today, the Jindal group is a multi-billion-dollar, multi-location, multi-product

business empire. The Jindal Group has manufacturing outfits across India, US and

Indonesia offices across the globe. 'Growth with a social conscience‟ has been a way

of life for the Jindal group. The group's strength lies in its individual companies, with

each one committed to consolidating its strengths and excelling in its chosen field.

128

JSW Steel, the flagship company of the JSW Group, is the largest integrated

private steel manufacturer in India in terms of installed capacity. It is an India-based

company engaged in the business of production and distribution of iron and steel

products. JSW‟s history can be traced back to 1982, when the Jindal Group acquired

Piramal Steel Limited, which operated a mini steel mill at Tarapur in Maharashtra and

renamed it as Jindal Iron and Steel Company.

The Company's principal activity is to manufacture hot rolled steel coils in

India using the revolutionary Corex technology. In addition, the Company also

manufactures steel plates and sheets. It manufactures steel using oxygen based iron

and steel through continuous casting and hot rolling. It consists of the most modern,

eco-friendly steel plants with the latest technologies for both upstream and

downstream processes.

JSW Steel offers the entire gamut of steel products, pellets, slabs, HR coils /

sheets, HR plates, CR coils, Galvanized coils / sheets, Colour coated coils / sheets.

By 2020 the company would be producing 32 million tons of steel annually with

Greenfield integrated steel plants coming up in West Bengal and Jharkhand.

JSW Steel is the largest private steel producer in India with manufacturing

facilities in Karnataka, Maharastra and Tamil Nadu. It has the largest Galvanising

capacity in India and also the largest Indian exporter with its presence in 74 countries

with the vision,

Global Recognition for Size, Culture and Quality, while Nurturing

Nature and Society.

129

On its road to growth and expansion, the Group is also conscious about its

responsibility towards environment and social development. Eco-efficiency is a

matter of principle. Preventive measures for damage to the environment are taken into

account at the planning stage of production and growth. JSW Steel Limited has

received the certifications like ISO: 9001:2000 for Quality Management System, ISO:

14001:2004 for Environment Management System, OHSAS: 18001:1999 for

Occupational Health and Safety Management System.

The major units of JSW Steel are, Vijayanagar works (Karnataka), Vasinad

and Tarapur works (Maharastra) and Salem works (Tamilnadu). While the above are

its major integrated steel plants which manufacture a variety of mild steel products,

few new plants at commissioning stage are, JSW Jharkand Steel Limited (Jharkand),

JSW Bengal Steel Limited (West Bengal).

It is headquartered in Mumbai (India) and employs more than 7,700 people.

With a production capacity of over 7.8 million tonne (MT) of crude steel, JSW Steel

Limited is India‟s third largest steel producer. In 2009-2010 its turnover is `19,493.17

crores and net profit of `1597.55 crores.

4.11.1 JSW Steel Limited (Salem Works)

JSW Steel Limited, Salem Works (formerly known as Southern Iron and Steel

Company Ltd.), was acquired by JSW Group in November 2004. Salem Works is the

only integrated steel plant in private sector in Tamil Nadu and is located at Pottaneri /

M. Kalipatti villages 35 km away from Salem. As part of the JSW group, the plant

130

underwent a dramatic transformation and started making profits from the first year

onwards.

The Company is having facilities for production of Pig Iron, Steel, Billet and

Rolled Steel products in the long product category. Products of Salem Works have the

hallmark of quality and combined with competitive pricing, they are highly preferred

in automobile and construction sectors. The present capacity is being expanded to

one million tons per annum (1 MTPA). It has adopted the Sinter plant – Blast furnace

– Energy Optimizing Furnace – Ladle Furnace, Vacuum Degassing Continuous

Casting Machine – bar and rod mill route with iron ore as the basic input material. It

also has plants for generation of power and production of oxygen. Salem Works is

highly environment conscious and the process and technology is designed for reusing

and recycling the process waste. We have an expanding green belt to provide a green

environment.

JSW has invested more than `1,300.00 crore to bring new facilities and to

upgrade the capacity of the plant after the acquisition. Many plants have been

augmented and the capacities have been increased. The JSW (Salem Works) has risen

like the Phoenix to become one of the largest industries in the state. JSW (Salem

Works) is an ISO-9001:2000, ISO-14001:2004 certified TS16949 Company, which is

enabling the growth of the automobile industry in south India. It also caters to the

needs of the construction industry in the south. The company employs about 965

employees (as on 01.12.2009) comprising of workmen, supervisors and managerial

cadre.

4.12 Quality of Work Life in SSP and JSW

131

Indian economy is in need of a device to boost employment opportunities,

raise income and its standards of living and to bring about a more balanced and

integrated economy. Steel industry is the best solution for achieving all these goals.

The prevailing capital for the promotion of steel industries and the plentiful supply of

labour largely favour the development of steel industries. It is also essential to

provide large scale employment and to utilize local raw materials and cater to the

local market. Hence, this sector of industry is playing a vital part in the economic

structure in India.

India has had consistently followed a policy of active support to the

development of steel industry during the last six decades. The Government has also

taken several policy measures. Among these measures, the establishment of new steel

units and development of allied industries were used as the important tools for the

promotion and growth of steel industry. The main objective of creating a new unit

was to encourage and support and creation, expansion and modernization of steel

plant is to develop the infrastructural facilities and create a necessary climate for the

development of the country.

Provision of infrastructural facilities, marketing opportunities alone cannot

provide success to steel sector. Due importance should also be given to the human

factor. Efficient human resources and their commitment are essential for the effective

management of any organization. Directing human resources of steel plants to the

right path through their better quality of work life is needed for success of any

industry. This study focuses its attention on the quality of work life programme now

prevailing in the steel plants in Tamil Nadu. The factors of quality of work life

considered for this study are: 1) Nature of Job, 2) Compensation of Employees, 3)

132

Working Conditions, 4) Opportunities for Growth and Development, 5) Social

Integration of Work, 6) Constitutionalism in the work, 7) Work and Total Life Space

8) Occupational Stress, 9) Workers Participation in Management, 10) Grievance

Handling, and 11) Social Relevance of Work.

4.13 Prevailing Factors of QWL in Select Steel Plants

The prevailing quality of work life factors in Salem Steel Plant (SSP) and JSW

Steel Limited (Salem Works) are presented in Table 4.6 and thus the second

objective is achieved.

Table 4.6 Prevailing QWL Factors in Select Steel Plants

Salem Steel Plant JSW Steel Limited

1. Nature of Job

Employees are interested in their job

Employees are involved in their job

Jobs are matched upon the existing

vacancies

Jobs are challenging in nature

Jobs are routine

Employees are interested in their job

Employees are involved in their job

Jobs are matched with the employee

skills

Jobs are challenging in nature

New jobs are introduced regularly

2. Compensation of Employees

Compensation policy is framed by the

National Joint Committee for Steel

(NJCS) by a bilateral agreement with

recognised Trade Unions

Salary as per experience only

Various allowances given are

(HRA,CCA, Night shift Allowance

and Conveyance Allowance)

Incentive scheme is available

Fringe benefits include (Hospital,

LTC, School, Subsidized canteen and

Leave encashment etc)

Lesser Bonus compared to other

Industries

Salary not compared with other

The compensation policy is framed by

the management on par with other

industries

Salary as per experience and skills

Various allowances given are (HRA,

Medical Allowance and Night shift

allowance)

Incentive scheme is available

Fringe benefits include ( LTC, Leave

encashment, Subsidized canteen and

Night shift allowance)

Satisfactory bonus

Salary is on par with other Industries

133

companies while fixing

Contd…

Table 4.6 Prevailing QWL Factors in Select Steel Plants (Contd…)

Salem Steel Plant JSW Steel Limited

3. Working Conditions

Safety is given top priority

Free from occupational hazards

No compromise on safety

Suitable trainings are given on safety

Importance is given to system

Conducive working condition

Bureaucratic ideas and equipments

Lesser fatigue

Provide Personal Protective

Equipments (PPE‟s) as and when

needed

Safety is given top priority

Free from occupational hazards

No compromise on safety

Suitable trainings are given on safety

Importance is given to area of work and

system

Conducive working condition

Introducing novel ideas and equipments

Lesser fatigue

Provide Personal Protective Equipments

(PPE‟s) as and when needed

4. Opportunities for Growth and

Development

Encouragement to learn and develop

Reward for creativity and innovation

Frequency and quality of training

programmes are satisfactory

Lesser responsibility

Job rotation and enlargement is lesser

Facilities for self improvement is more

Importance is given for individual

achievement

Opportunity to develop new skills and

ideas

Lesser freedom to take decisions

Lesser opportunity to use capabilities

Promotions are only time based

Encouragement to learn and develop

Reward for creativity and innovation

Frequency and quality of training

programmes are satisfactory

More responsibility

Job rotation and enlargement are taken

care of

Facilities for self improvement exists

Importance is given for individual

achievement

Opportunity to develop new skills and

ideas

Freedom to take decisions Opportunity to

use capabilities Promotions are

given based on

performance

5. Social Integration of Work

Diverse backgrounds Recognition for

contribution Performance of

committees is

depends on Trade unions

Diverse backgrounds

Recognition for contribution

Performance of committees depends on

management

134

Better Human relations

Recognition as a team

Free from prejudice

Better Human relations

Recognition as a team

Prejudice prevails to lesser extent

Contd…

Table 4.6 Prevailing QWL Factors in Select Steel Plants (Contd…)

Attitude towards job is more

Sense of single community

Interaction of ideas and feelings

Management understands subordinates

problems

Team spirit exists at all levels

Opportunity to accomplish work

individually

Views of employees are taken in to

account

Reciprocal help among employees is

good

Attitude towards job is more

Sense of single community

Interaction of ideas and feelings

Management understands subordinates

problems

Team spirit exists at all levels

Opportunity to accomplish work

individually

Views of employees are taken in to

account Reciprocal help among employees is good

6. Constitutionalism in the work

Employees are treated with respect

Chance for expressing opinions exists

Equitable treatment for all employees

without discrimination

Equal distribution of work

assignments

Satisfaction of norms and rules

Legislative/Statutory norms followed

Employees are able to voice opinions

and influence changes in their area of

work

Encouragement of cooperation and

teamwork

Right to join Trade union/Association

as they like (Recognized trade unions

INTUC/CITU, Welfare associations-

SC/ST,OBC, Executive Association-

SEFI)

Employees are treated with respect

Chance for expressing opinions exists

Equitable treatment for all employees

without discrimination

Equal distribution of work assignments

Satisfaction of norms and rules

Legislative/Statutory norms followed

Lesser chance to voice opinions and

influence changes in their area of work

Encouragement of cooperation and

teamwork

No Trade union exists and hence no

chance

7. Work and Total Life Space

Satisfaction of work schedule and rest

Flexible work schedule to meet family

events

Attending family events

Satisfaction of work schedule and rest

Flexible work schedule to meet family

events

Attending family events

135

Adequate counseling is unavailable to

employees

Working hours/patterns

Adequate counseling is unavailable to

employees

Working hours/patterns

Contd…

Table 4.6 Prevailing QWL Factors in Select Steel Plants (Contd…)

Employees do jobs not only for

money

Needs and wants of employees are

satisfied

Employees are able to concentrate on

social and individual care

Time spent on job does not affect

employees‟ life

Employees do jobs not only for money

Needs and wants of employees are

satisfied

Employees are able to concentrate on

social and individual care

Time spent on job does not affect

employees‟ life

8. Occupational Stress

Stress in organization is less

Management has not yet attempted to

understand stresses and its causes

No strategy has been adapted for

minimizing stress

The management takes least efforts

to reduce monotonous and

disinteresting job

Periodical workshops have not been

conducted to control and reduction of

stress

Stress influences on productivity

Stress in organization is less

Management has not yet attempted to

understand stresses and its causes

No strategy has been adapted for

minimizing stress

The management takes efforts are taken

to reduce monotonous and disinteresting

job

Periodical workshops have not been

conducted to control and reduction of

stress

Stress influences on productivity

9. Workers Participation in

Management

Employees are recognized as a human

being rather than as a labourer

Workers Participation in

Management prevails in the form of

Workers‟ Directors, Work councils,

Joint committees on safety and

production, regular communication

exercise on company performance by

employees

Mutual trust and peace

Autonomy to subordinates

Involvement of employees in

organizational matters is high

Meetings with employees for mutual

Employees are recognized as a human

being rather than as a labourer

Participation of employees in

management is in the form of Joint

committees on production and safety,

regular meeting with employees

Mutual trust and peace

Autonomy to subordinates

Involvement of employees in

organizational matters is low

Meetings with employees for mutual

136

understanding

Sharing information by superiors

understanding

Sharing information by superiors

Contd…

137

Table 4.6 Prevailing QWL Factors in Select Steel Plants (Contd…)

Opportunity to express views

Joint consultation exists on job related

matters

Importance is given to employee

participation while drafting rules,

procedures and regulations

Opportunity to express views

Joint consultation exists on job related

matters

Importance is given to employee

participation while drafting rules,

procedures and regulations

10. Grievance Handling

Volume of grievance is less

Three member Grievance redressal

committee exists

Feeling of injustice is low

There is scope for appeal on grievance

There is a chance for ventilating

grievance

Management is keen on solving

grievances

Superiors find time to solve employee

grievance

Volume of grievance is less

HR department addresses grievance

Feeling of injustice is low

Scope for appeal on grievance is limited

There is a chance for ventilating

grievance

Management is keen on solving

grievances

Superiors find time to solve employee

grievance

11. Social Relevance of Work

Satisfaction is there for employees on

quality of products/services

Employees feel satisfied on

organization‟s contribution to the

society

Standard of living has improved

Satisfaction of employees‟ life comes

from work

Improvement of dignity and respect is

due to the organisation

Organization functions as a social

responsible unit

Job in SSP enhances the social

prestige of employee

CSR activities are carried out through

separate department in SSP.

There is a match of work life with the

social life

Satisfaction is there for employees on

quality of products/services

Employees feel satisfied on

organization‟s contribution to the society

Standard of living has improved

Satisfaction of employees‟ life comes

from work

Improvement of dignity and respect is

due to the organisation

Organization functions as a social

responsible unit

Job in JSW enhances the social prestige

of employee

Separate foundations have been

constituted for carrying out CSR

activities

There is a match of work life with the

social life Source: Personal interview with employees of concerned steel plants, HR departments, company‟s documents and

circulars