‘Our target is 1 mln tonne steel production by 2025’

Copy of Sponge Kiln

Steel Exchange India Limited (SEIL) is one of the largest steel manufacturers in the private sector in Andhra Pradesh. The promoters were originally into trading of steel &

B Satish Kumar

B Satish Kumar

steel related products under the banner of Vizag Profiles. As demand for steel started growing from 2000 onwards, the promoters gradually ventured into steel manufacturing as a backward integration of their strong steel retail and trading business.

B Satish Kumar, MD – SEIL told Sandeep Menezes that the steel sector is expected to grow better – the present capacity is 90 mtpa with likely growth of around 5 per cent.  

 

 

Excerpts from the interview:

 

 

Steel consumption has largely remained flat in 2013-14. Indian steel consumption has grown only 0.5% in April 2013-January 2014, making it the lowest growth rate in the past 10 years and second-lowest in the past 15 years. Comment.

 

Lowest growth rates are definitely worrying. New capacities in steel making were added but a few old units, especially those not having captive mines, are closed. At prevailing high cost of iron ore, they cannot compete in domestic or export market. Nonperforming asset is a drain of scarce financial resource of the nation. This is worse than the minimal growth mentioned above.

With the new government coming in and its focus on industry and infrastructure, what is your outlook on steel sector?

Gulf countries are building up steel capacities. Consumption of steel in Americas, Australia and Europe continents is near saturation and growth can even be negative in some countries. They import part of their requirements. Among Asian countries, Japan, Korea and Taiwan have excess capacity over their real consumption. They are exporters of steel- be it finished form directly or indirectly thro export of machinery, ships, automobiles and white goods etc.

China achieved high economic growth in recent past and became biggest producer as well as consumer of steel in the world. Since growth rate in China is on decline, steel consumption shall also come down. Hence to make use of its installed capacity, China has to export steel in significant volumes. It has abundant reserves of raw materials for steel making, an advantage.

In earlier times, Indian steel industry was cyclic in nature. Ups and downs were dictated, just not by developments in India alone, but also by other countries. It will not be so in coming years. As mentioned above, with export opportunities declining in future, India may have to consume most of the steel produced internally.

Government headed by Prime Minister Narendra Modi has come in. Focus is on industry and infrastructure on which growth of steel sector also depends. Our political system, decision making and governance have their own inertia. It may not be easy for Modi to maneuver the way Deng Xiaoping and Hu Jintao did in China. They embodied focus in Chinese politics on technocratic competence rather than on persona. Accelerated development was byproduct.

 

Steel sector is expected to grow better. Present capacity, 90 mtpa, is likely to grow around 5 %.

Currently many of the rebars produced nationwide are not of desired quality and even the new BIS Code for rebars (IS: 1786-2008) allows unwittingly improper rebars to be used instead of being rejected. Comment.

Many of the rerolling mills in secondary sector have no control on steel chemistry. They source pencil ingot/ billets from others. Steel makers having induction furnaces find it difficult to achieve specified chemistry if impurities (more particularly sulphur and phosphorous) in charge material are beyond tolerable limits. Many re rollers do not have facilities to impart desired physical properties after rolling. Since they offer their product at least prices, they survive in business.

BIS Code IS: 1786- 2008 (and earlier versions) is specification for high strength deformed steel bars and wires. It specifies on chemical composition, rolling, requirements of bond, nominal sizes, tolerances, physical properties, inspection & testing, delivery, identification and marking.

The standard does not limit itself to any specific process route or deals how to obtain chemistry and other physical properties. Well, it may not be fair to say that BIS standard allows, even unwittingly, use of improper bars instead of being rejected.

By merely establishing a standard, product compliance cannot be assured. Ultimately, it is the customer who has to check the rebar quality aspects and get satisfied about their adequacy to meet the intended application needs.

Many times dubious TMT bars find their way into everyday use. Under such circumstances can readymade rebar centres provide proper reinforcement for civil construction?

Yes. Rebar centers can provide proper reinforcement. But they are located in select few places, beyond the reach of many. They can supply cut and bent bars to required shape. But quantity has to be substantial. Steel shops are available plenty, much more than service centers and nearer to customers. Ultimately, it is overall cost that matters to the end user including logistics.

TMT (Thermo Mechanically Treated) is one process by which physical properties are imparted to rebar immediately after rolling. Micro alloying of liquid steel can also impart requisite physical properties to the rebar and do not require quenching needed for TMT process.

Sub standard manufacturers, greedy contractors, bad advisers, and ignorant customers – all are responsible in their own ways for use of dubious TMT bars, not suitable for intended application.

Burdened with a surplus steel production capacity of 250 MT, China is trying to push its output into India which has led to demands for higher import duty. Comment.

Advocating for higher import duty is one way of making imported product more costly to the consumer and indirectly a protection to domestic industry. The situation can as well be tackled by ensuring availability of iron ore to domestic steel producers at reasonable price and imposing higher export duty on iron ore. Just enough mining for domestic companies helps to preserve iron ore for future generation. Indian iron ore reserves are very low on per capita basis in comparison with iron ore exporting countries and China.

Recent appreciation of rupee and falling international steel prices had forced steelmakers to marginally cut prices of flat product like hot-rolled coil (HRC) in order to stay competitive with cheaper imports. Tell us about the current situation?

Correction of domestic steel prices, based on international prices and currency variations is a regular phenomenon. India has surplus capacity in hot rolled coils, exports in large volumes. Hence price correction is more relevant for flat products.

Rupee appears to have settled down around 60 per US $. With expected higher economic growth in coming years, rupee should appreciate further. If government actions lead to availability of iron ore to domestic companies at prices lower than prevailing prices, steel should become cheaper and industry also gets encouraged for exports. As already said, it helps better than imposing import duty on steel imports.

Fibre reinforced polymer is increasingly being used as an alternative solution to the traditional steel reinforcement bars on many new major projects globally. Comment.

Concrete containing cement, water, aggregate and discontinuous discrete fibers is called Fiber Reinforced Concrete. Fibers can be in the form of steel, glass or of synthetic polymers, such as polypropylene and nylon, mentioned in the question.

Steel fibers reduce reinforcement requirement and crack width in concrete. They improve structural strength, ductility, impact & abrasion resistance and freeze- thaw resistance.

 

Polypropylene and Nylon fibers improve mix cohesion, resistance to explosive spalling in case of a severe fire, impact resistance and resistance to plastic shrinkage during curing.

 

Blends of steel and polymeric fibers are often used in construction projects in order to combine benefits of both products; structural strength provided by steel fibers and resistance to explosive spalling & improvement in plastic shrinkage provided by polymeric fibers. Nonmetallic fibers are used in lieu of metallic reinforcement at pavements near toll plazas since the latter can disrupt electronic toll reader signals.

 

Following are worthy of mention where steel fibers are used without conventional reinforcement.

–          Construction of a road over lay near Mathura, using more than 400 tons of steel fibres

–          A 3.9 km long tunnel carrying heating pipe lines from a power plant on island Amager into Copenhagen, lined with steel fiber reinforced concrete segments

–          10 cm thick slabs of a parking garage near Heathrow Airport.

–          Pre cast steel fiber reinforced concrete manhole covers and frames, used in India.

 

However, it may be noted; generally fibers do not increase the flexural strength of concrete, and so cannot replace moment–resisting or structural steel reinforcement. Indeed, some fibers actually reduce the strength of concrete. So, application of fibers in concrete constructions will not eliminate or lead to significant reduction in consumption of conventional steel re bars.

What is SEIL’s long term business strategy? Tell us about your growth, expansion plans?

Steel Exchange India Ltd’ s main plant is located at Sreerampuram village, L Kota Mandal, Vizianagaram District, Andhra Pradesh. It is 30 km far from Visakhapatnam. Plant has good infrastructure – 400 acre land, three track private railway siding, good road and rail network, proximity to ports and dependable water sources. The company has established a strong chain of retail outlets in Andhra Pradesh and branches in Chennai, Bangalore and Cochin.

Present capacity is 220,000 tpa steel re bars. Sponge iron is produced in 2×350 tpd kilns. It is melted along with pig iron and scrap in two induction furnaces. Liquid steel cast into billets and rolled in bar mill. Two more induction furnaces are being added, due for commissioning in Dec 2014. It will enhance steel capacity to 300,000 tpa. The unit has a captive power plant 60 MW.

Our target is to achieve steel production 1,000,000 tpa by year 2025.

Environment Clearance is expected shortly for setting up a pellet plant 600,000 tpa. Pellets, produced using iron ore fines, substitute lump ore used as feed material to Sponge Iron kilns. It also leads to improvement in productivity of kilns and helps in overall cost reduction.

We have planned to expand further in two phases. In first phase, we intend to enter special steels segment in long products (billets, bars, hexagons, flats and rod/ wire coils – 300,000 tpa) and in second phase, flat products (sheet coils 300,000 tpa). Consultants are already appointed to prepare Detailed Project Report. We have competent team for timely execution of projects.

We also wish to expand trading activities. We are regular importers of steel related items i.e., scrap and coal. We intend to export steel products shortly. Our infrastructure in Visakhapatnam, very near to ports, can handle bulk and container cargos. Soon, we intend to set up offices in Singapore and Dubai to facilitate international trading activities.

Other manufacturing plants of the company include:

-Pencil ingot plant 90,000 tpa with 3 induction furnaces and 12 MW gas engine based power plant at Kothapeta, Ravulapalem near Rajahmundry in Andhra Pradesh.

-Galvanizing & HC wire plant 40,000 tpa- Stress relieved PC wires, 3ply/ 7 ply and 4 mm indented wire. The unit is located adjacent to the steel factory.

-Rebar rolling mill, 60,000 tpa, located near Pharma city, Parawada, Visakhapatnam.

 

 

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