SAIL chairman Mr CS Verma interview with ToI

Sunday 30 October,2011

Economic Times reported that steel demand is expected to hold up in India despite the global economic slowdown and the state run Steel Authority of India Limited is undertaking various measures to boost capacity.

In an interview with TOI, SAIL chairman Mr CS Verma says the steel giant is also expanding its presence in rail transportation, power generation and mineral segments.

Excerpts:

Q - How do you see the demand situation against the backdrop of the global economic slowdown?

A - My assessment is that the slowdown in the world economy is not going to impact Indian steel industry. In India, there is huge potential for growth because the per capita consumption of steel is just 35 kilogram per annum. The world average is 200 kilogram per annum. China is above 400 kilogram, Korea is above 1,000 kilogram per capita per annum. The 12th five year plan talks about infrastructure spending of USD 1 trillion.

The World Steel Association has given a demand projection of 5% globally and for India they have pegged demand at 13% in 2011 and by 14% in 2012. These data suggest that there is not going to be any slump in the Indian steel industry. If you see the capacity addition aspect in the steel sector in India, it would be around 110 million tonnes by next two years. There are so many projects, which are at an advanced stage of completion. We are projecting capacity of 200 million tonnes by 2020. Demand for steel will go up in India and I don't see events in Europe and US impacting Indian steel industry.

Q - How is the iron ore situation in the country?

A - To produce one tonne of steel we require roughly about 1.8 tonnes of iron ore and 0.9 tonne of coking coal. India has iron ore reserves of about 24 billion tonnes to 25 billion tonnes. Production of iron ore in India is roughly about 225 million tonnes per annum as of now. We require about 110 million tonnes per annum. We are exporting the remaining 110 or 120 million tonnes. Availability of iron ore will not be a matter of concern for India.

There will not be any shortage of iron ore in India. There could be some regional imbalances such as the recent Bellary crisis. The region accounts for about 20% of iron ore production India.

Q - What about coal?

A - India has lot of thermal coal reserves but it does not have coking coal reserves. Whatever little coking coal reserves in India we have is soft coal. We in SAIL require roughly 14 million tonnes of coking coal. SAIL also imports 11 million tonnes of coking coal. If you see the April 2010 levels, coking coal price was USD 125 a tonne and in February March it went up to USD 350 a tonne due to floods in Australia.

Prices are coming down but they are not coming down to the level we had expected. Even now, the price level is hovering around USD 275 per tonne to USD 280 per tonne. We are trying to use technology which uses non coking coal, that will gradually bring down the need for coking coal. We are also trying to acquire mines abroad to get over this problem.

Q - What about your expansion plans?

A - We have undertaken a massive expansion and modernization program. The value of this program is $18 billion. They are at a very advanced level of completion. We have already spent INR 26,000 crore on various modernization schemes. Our modernization scheme will be complete in the next two years time and our capacity will be 24 million tonnes per annum.

Besides, we are expanding in power generation, rail transportation and other minerals such as acquisition of manganese ore mines. We are taking rail transportation in a big way. We are discussing with the railways about laying and maintenance of tracks. We have also finalized an MoU with Hindustan Prefab for manufacture of prefabricated steel structures, to be used in the construction industry. We have set up high-level talks with the railways for supply of coaches and we are tying up with foreign companies for technology for this.

(Sourced from ET)

SAIL put perspective plans to become global brand - Chairman

Tuesday, 31 May 2011

The Hindu quoted Mr CS Verma chairman of Steel Authority of India Limited as saying that it hopes to emerge as a global company in the next few years. Even as the company races to complete its INR 72,000 crore modernization plan, it has put in place a perspective plan to increase the capacity to 60 million tonnes by 2020 from the present 14 million tonnes.

Mr Verma said that "Our target is to take the company from being a domestic player to a global brand."

Mr Verma said that the stakeholders of the company would see the emergence of a global SAIL in the months to come.

To realize this game plan, the company is working on multiple fronts at the international level by adopting the inorganic route and going in for strategic tie ups aimed at backward, forward and lateral integration. He added that the strategy hinged on ensuring domestic and overseas raw material security through the acquisition route while marking a footprint overseas through Greenfield units in mineral rich countries. On the scanner are countries like Mongolia and Indonesia for units and Australia for acquisition of properties. At least one deal for coking coal was likely within this fiscal.

Mr Verma said that SAIL secures iron ore from its captive sources and the recent environmental clearance given by the government for mining in the Chiria mines in Jharkhand had also strengthened its position. In Chiria, SAIL had sought forestry clearance for about 25% (595 hectares) of the total leasehold area to start mining operations, for which stage I forestry clearance had been provided. Environment clearance for Budhaburu, the biggest lease of Chiria (824 hectares), had also been granted.

Development activities for setting up a 14 million tonnes per annum (run of mine) mechanized mine were under progress at Rowghat to meet the Bhilai Steel Plant's long term iron ore requirement. Only 30% of the coking coal requirement was met from indigenous sources he said. To reduce dependence on increasingly costlier imported coal, SAIL had laid a thrust on developing the coal blocks allocated to it by the government besides expanding production from captive collieries.

Mr Verma said that the ongoing phase of modernization to increase the capacity from 13.82 million tonnes to 23.50 million tonnes with an investment of about INR 72,000 crore, including modernization and expansion of iron ore mining capacity, would be completed by 2012-13. A milestone based monitoring system was being put into place. Referring to the 2020 plan, Mr Verma said that dovetailing with the government's plans to increase the domestic steel production capacity to 180 million tonnes by 2020, SAIL too was putting a perspective plan in place to raise the production capacity to 60 million tonnes by 2020.

He added that "Our target is to take the company from being a domestic player to a global brand. SAIL also plans to increase its share in the domestic market from the present 19% to 20% to one third of the market for steel."

On SAIL's strategy for staying ahead at a time when its competitors too are racing ahead with their expansion plans, Mr Verma said the company's people focus had led to highest ever labor productivity of 241 tonnes a man. SAIL also planned to increase the share of value added products in its product basket, from the present 38% to around 50%.

Mr Verma said that SAIL had tied up with top steelmakers such as Nippon Steel, POSCO and Kobe Steel for JVs. SAIL was working with Kobe Steel of Japan to install a 1.5 million tonnes steel plant based on gas based DRI technology and using electric arc furnace for steel making with value added products at Jagdishpur in Uttar Pradesh. The feasibility of setting up a 1,000 MW gas based power plant was also being examined.

He added that "SAIL is in talks with different governments like Mongolia and Indonesia for setting up steel projects. We are aggressively pursuing equity participation with existing leading coal mining companies. Due diligence of some coal assets is in progress and we hope to finalize these shortly. At present, I would not like to comment on any proposed tie up with ArcelorMittal." (sourced Thehindu)

Coking coal price will fall further: SAIL Chairman

Mar26, 2011, 06.56PM IST,PTI

NEW DELHI: Steel Authority of India Chairman C S Verma today said that the coking coal prices, that have softened in the last two weeks, will fall further on expected rise in production.

"Coking coal prices in spot market have already fallen. I am of the firm opinion that the current coking coal price of $ 235 a tonne cannot be sustainable," Verma told reporters here.

Following flash-floods in Australia's Queensland province, the price of coking coal had skyrocketed to $ 350 a tonne just two weeks back. However, it felled sharply since then to $ 235 a tonne now.

"For the last two weeks, coking coal prices have been softening, especially on Japan fall-out. Japan is importing about 10 million tonnes every month. So, there is more availability in the market," he added.

Verma said the coking coal price would come to normalcy once mining companies in Australia resume full operations.

When asked if SAIL has entered into a contract for supply of coking coal for the April-June quarter, he said that the company was yet to take a final call, but it would soon happen.

"We have reached to a provisional pricing only. I can't share the detail since it is confidential," Verma said.

SAIL requires around 15 million tonnes of coking coal a year. Only 4.5 MT is met through domestic sources and the remaining 10.5 MT comes from imports, around 60 per cent of which comes from Australia. (sourced :Economic Times)

SAIL Chairman C. S. Verma's reaction to the Budget

New Delhi, 28 February, 2011

"The Budget is firmly growth-oriented and has various positives for the steel industry.

The Govt’s continued thrust on development of infrastructure and manufacturing will help steel demand in the country to grow. Besides, higher support for the housing sector is a step in the positive direction.

"Higher export duty on iron ore has been a long pending demand of the steel industry and the Budget has taken care of the issue by increasing the export duty to 20%. This should ensure higher availability of iron ore for the Indian steel industry.

Again, withdrawal of export duty on pellets should encourage installation of pellet plants by mining companies. More pellet plants in the country will also benefit the steel industry.

"Further, reduction in surcharge on income tax from 7.5% to 5% will have a positive impact on domestic companies, making available disposable surplus for investment. The proposed Constitutional Amendment Bill on GST is also a welcome development."

SAIL chairman welcomes rail budget

Sunday, 27 Feb 2011

Mr CS Verma chairman of Steel Authority of India Limited has welcomed the rail budget

He said “No direct increase in freight is good news for the steel industry, because for every tonne of steel, around 4 tonnes of material is transported, including raw materials and finished goods. Substantial increase in raw material prices over the last few months has already put pressure on the margins of steel companies. Therefore no direct freight hike comes as a much-needed breather.”

He said “In addition, laying of new and modified rail lines, procurement of wagons and related investments in infrastructure are all positive steps with reference to the steel industry.”

Mr Verma added that “We welcome the well defined long term targets announced in the Rail Budget such as laying of 25,000 kilometers of new rail lines in the next 10 years, including plans to complete 1,000 kilometers of new lines during FY'12. Besides, the decision to set up 5 state of the art wagon factories in JV/PPP mode will go a long way in adding to transport infrastructure of the country.”

SAIL is an active partner in the growth of the Railways in the true sense, since the company’s share in total rail freight revenue is around 8%.(source:India InfolineNews Service)