For Steel Authority of India Ltd (SAIL), one of India’s largest steelmakers, 2011 holds a lot of promise. The state-owned company is heading for a follow-on public offer (FPO) around February, while entering new product areas, making global acquisitions to secure raw material supply and partnering with international companies for technology.
Leading the company through its next phase of growth, the SAIL Chairman CS Verma tells what is on the anvil.
As SAIL gears up for the FPO this year, how are you looking to meet the independent director criterion under SEBI’s Clause 49? At present you have only four independents and you need to appoint one more.
Efforts are on. We are working to ensure that SAIL will be compliant with the relevant regulations under Clause 49 at the time of filing the document with the relevant authorities. I do not foresee any problem in this regard.
International Coal Ventures Ltd (ICVL), in which you are a partner, is expected to make a bid for Australia’s Riversdale Mining. At what stage is the acquisition process?
ICVL has appointed Citigroup as its merchant banker to examine the feasibility of the proposal. A decision in this regard will be taken after the due diligence is over.
What is your outlook on steel prices and also of raw materials like iron ore and coking coal?
According to World Steel Dynamics (WSD), the leading steel information service, prices of steel making inputs such as coking coal and iron ore are rising across the globe. The term it has used to describe this rise is ‘lofty’, which explains the situation for steel producers quite aptly. As a result, says WSD, prices of hot rolled products are ‘spiking up’ majorly in the western countries, leading to higher export prices. It is well-known that prices in domestic markets are influenced by prices of imports.
When will the detailed project report (DPR) on SAIL-Posco joint venture for a new plant in Bokaro be ready?
The DPR for the proposed SAIL-Posco joint venture is in the final stages.
What other joint ventures is SAIL looking at? There has been talk of a third foreign partner in a tripartite joint venture with SAIL, BHEL for CRGO steel, what is the status of this?
SAIL continues to explore joint ventures with foreign steel majors to provide opportunities for speeding up production of products for which technology is not easily accessible or for processes which are registered/patented. For instance, SAIL is in discussion with Kobe Steel for production of nuggets, which will be a substitute for steel scrap. Accordingly, a feasibility report for the adoption of this technology namely ITMk3 is in advanced stage of completion.
Recently, SAIL renewed its collaboration with CBMM Brazil for development of API X-80 grade plates through HTP technology to augment production of high-strength steel for line pipe application.
SAIL is keen to set up manufacturing unit for CRGO sheets considering the growing demand for these sheets from the power sector. Preliminary discussions have been held with some of the firms which have access to the technology. A working group has been set up to explore the opportunity of setting up CRGO production facility in India.
What is the status of the Sindri land acquisition in Jharkhand?
Discussions are continuing with the Ministry of Fertilisers and Chemicals on the matter.
Now, there will be a little bit of SAIL in cars
With the rapidly growing domestic auto industry turning out to be a lucrative market for steelmakers, SAIL has come out with elaborate plans to make auto-grade steel.
Chairman SAIL said that as part of its close to Rs. 70,000-crore modernisation programme, it is setting up a new cold rolling (CR) mill with a 1.2 million tonnes per annum (mtpa) capacity. This mill will be built at its Bokaro plant and would primarily target auto and the white goods industry.
“We believe the steady growth of the auto sector is a key driver for steel demand going forward, particularly for CR products. SAIL’s major flat steel producing plant at Bokaro is expanding its volume while upgradation of technology is also being undertaken.
“A new cold rolling mill is being set up with coupled pickling and tandem mill, 100 per cent hydrogen annealing, electrolytic cleaning line, tension levelling and automatic packing stations, etc.
“Also, galvanising lines are being set up both for hot rolled (HR) and CR products. Provision has been made for supplying of HR pickled and oiled material. Necessary upstream projects like facilities for de-sulphurisation and upgradation of hot strip mill are also on the anvil,” he said.
According to industry analysts, demand from the auto sector accounts for about 10 per cent of total steel supply by Indian producers. Most Indian automakers, however, import large quantities of auto-grade steel from companies in Japan and Korea. In India, Essar Steel and Tata Steel are the biggest suppliers to the auto industry.
Other steelmakers have also announced fresh investments for producing auto-grade steel in India.
Among them, Korean firm Posco has indicated an investment of $284 million for a 1.8-mtpa cold-rolled steel plant in Maharashtra. Japanese company Nippon Steel is also investing Rs. 164 crore on an auto steel pipe plant in Rajasthan. Both these facilities will come on-stream by 2012.
SAIL’s R&D centre has already developed grades required for chassis and under-the-bonnet components. Once the facilities for skin body sheets are available, SAIL is confident of developing materials for that too, said Verma.
“We expect the new facilities will be able to supply to almost all requirements of auto grade steel that is hot rolled, cold rolled and galvanised, except for the skin components for which IF grade steel is required.
“However, in the second phase of expansion of the Bokaro Steel Plant, when the older SMS-I will make way for SMS-III, facilities will be added at the steel melting stage so that SAIL is in a position to meet the required steel grades of skin component also.
“In that phase of expansion, a colour coating line is also envisaged. With these facilities in place, SAIL will be able to cater to the requirements of chassis, under-the-bonnet components, and later to outer body sheets as well,” he said.
Leading the company through its next phase of growth, the SAIL Chairman CS Verma tells what is on the anvil.
As SAIL gears up for the FPO this year, how are you looking to meet the independent director criterion under SEBI’s Clause 49? At present you have only four independents and you need to appoint one more.
Efforts are on. We are working to ensure that SAIL will be compliant with the relevant regulations under Clause 49 at the time of filing the document with the relevant authorities. I do not foresee any problem in this regard.
International Coal Ventures Ltd (ICVL), in which you are a partner, is expected to make a bid for Australia’s Riversdale Mining. At what stage is the acquisition process?
ICVL has appointed Citigroup as its merchant banker to examine the feasibility of the proposal. A decision in this regard will be taken after the due diligence is over.
What is your outlook on steel prices and also of raw materials like iron ore and coking coal?
According to World Steel Dynamics (WSD), the leading steel information service, prices of steel making inputs such as coking coal and iron ore are rising across the globe. The term it has used to describe this rise is ‘lofty’, which explains the situation for steel producers quite aptly. As a result, says WSD, prices of hot rolled products are ‘spiking up’ majorly in the western countries, leading to higher export prices. It is well-known that prices in domestic markets are influenced by prices of imports.
When will the detailed project report (DPR) on SAIL-Posco joint venture for a new plant in Bokaro be ready?
The DPR for the proposed SAIL-Posco joint venture is in the final stages.
What other joint ventures is SAIL looking at? There has been talk of a third foreign partner in a tripartite joint venture with SAIL, BHEL for CRGO steel, what is the status of this?
SAIL continues to explore joint ventures with foreign steel majors to provide opportunities for speeding up production of products for which technology is not easily accessible or for processes which are registered/patented. For instance, SAIL is in discussion with Kobe Steel for production of nuggets, which will be a substitute for steel scrap. Accordingly, a feasibility report for the adoption of this technology namely ITMk3 is in advanced stage of completion.
Recently, SAIL renewed its collaboration with CBMM Brazil for development of API X-80 grade plates through HTP technology to augment production of high-strength steel for line pipe application.
SAIL is keen to set up manufacturing unit for CRGO sheets considering the growing demand for these sheets from the power sector. Preliminary discussions have been held with some of the firms which have access to the technology. A working group has been set up to explore the opportunity of setting up CRGO production facility in India.
What is the status of the Sindri land acquisition in Jharkhand?
Discussions are continuing with the Ministry of Fertilisers and Chemicals on the matter.
Now, there will be a little bit of SAIL in cars
With the rapidly growing domestic auto industry turning out to be a lucrative market for steelmakers, SAIL has come out with elaborate plans to make auto-grade steel.
Chairman SAIL said that as part of its close to Rs. 70,000-crore modernisation programme, it is setting up a new cold rolling (CR) mill with a 1.2 million tonnes per annum (mtpa) capacity. This mill will be built at its Bokaro plant and would primarily target auto and the white goods industry.
“We believe the steady growth of the auto sector is a key driver for steel demand going forward, particularly for CR products. SAIL’s major flat steel producing plant at Bokaro is expanding its volume while upgradation of technology is also being undertaken.
“A new cold rolling mill is being set up with coupled pickling and tandem mill, 100 per cent hydrogen annealing, electrolytic cleaning line, tension levelling and automatic packing stations, etc.
“Also, galvanising lines are being set up both for hot rolled (HR) and CR products. Provision has been made for supplying of HR pickled and oiled material. Necessary upstream projects like facilities for de-sulphurisation and upgradation of hot strip mill are also on the anvil,” he said.
According to industry analysts, demand from the auto sector accounts for about 10 per cent of total steel supply by Indian producers. Most Indian automakers, however, import large quantities of auto-grade steel from companies in Japan and Korea. In India, Essar Steel and Tata Steel are the biggest suppliers to the auto industry.
Other steelmakers have also announced fresh investments for producing auto-grade steel in India.
Among them, Korean firm Posco has indicated an investment of $284 million for a 1.8-mtpa cold-rolled steel plant in Maharashtra. Japanese company Nippon Steel is also investing Rs. 164 crore on an auto steel pipe plant in Rajasthan. Both these facilities will come on-stream by 2012.
SAIL’s R&D centre has already developed grades required for chassis and under-the-bonnet components. Once the facilities for skin body sheets are available, SAIL is confident of developing materials for that too, said Verma.
“We expect the new facilities will be able to supply to almost all requirements of auto grade steel that is hot rolled, cold rolled and galvanised, except for the skin components for which IF grade steel is required.
“However, in the second phase of expansion of the Bokaro Steel Plant, when the older SMS-I will make way for SMS-III, facilities will be added at the steel melting stage so that SAIL is in a position to meet the required steel grades of skin component also.
“In that phase of expansion, a colour coating line is also envisaged. With these facilities in place, SAIL will be able to cater to the requirements of chassis, under-the-bonnet components, and later to outer body sheets as well,” he said.
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