steel making, next steps
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PRESENTED BY
Mr.BIPIN BARAHATE, ASST MANAGER (Mech)
on 12/04/2009
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NMDC, a brief introduction
2007–20081996–1997
1992–1993
Disinvested 1.61%
to Financial
Institutions
1996–1997
Disinvested 0.01%
in favour of
employees
1998 Conferred the Miniratna
status - Enabled the board of
the company to exercise certaincapital expenditure powers
without reference to the GoI
Ranked the Best Performing PSU as per the
survey carried out by the Department of
Public Enterprises (DPE) for the year 2007–
08 on the basis of overall performance on
financial and other parameters
2008 - Conferred the
Navaratna status -
board’s power to incur capital expenditure are
further enhanced
1992–1993 1998
NE
W
ER
AOFDISINVE
STMEN
T&D
IVERSIFI C
ATIO
N
Established on 15th November 1958 as a Government company as per the provisions of the
Companies Act
Developed from being a single product (lump ore) single customer company to a multi product
(lump ore, fines and calibrated lump ore), multi customer (>100) company over the years
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• Financial strength
• High net worth, zero debt, cash
reserves
Indian iron ore producer accounting for:
– About 14% of India’s total production of iron ore *
– About 1.7% of world iron ore production **
Significant growth and diversification plans
– Expansion and value addition in
existing businesses
– Diversifying into new minerals
Among the world’s least cost producers of
high quality iron ore
– 65%+ Fe content
Technological strength
– Highly mechanised iron ore mines
– Availability of technology and
infrastructure at existing projects
that can support further expansion
with minimal incremental investment
Highly experienced
management and workforce
Best performing PSU 2007-
08, Navaratna status
conferred in 2008
In house exploration
expertise and R&D
capability
* Source: http://ibm.gov.in/mineralproduction.html
** Source: www.worldsteel.org, Tex Report
NMDC Highpoints
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When Does Diversification
Start to Make Sense?
Strong competitiveposition, rapidmarket growth --Not a good time todiversify
Weak competitiveposition, rapidmarket growth --Not a good time todiversify
Strong competitiveposition, slowmarket growth --
Diversification istop priority consideration
Weak competitiveposition, slowmarket growth --
Diversificationmeritsconsideration
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Strategies for Entering
New Businesses
Acquire existing company
Start-up new business internally
Joint venture with another company
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ADVANTGES OF JOINT
VENTURES
COST
EFFECTIVE
NESS
TECHNICAL EXPERTISE
SKILLED MANPOWERCONFIDENCE OF
SHARE HOLDERS
GENERATION OF FUNDS
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NMDC Business Strategy
Core Business
Exploration, evaluation,mining, beneficiation
Core Strength
Mining at minimum cost,
eco friendly mining
Horizontal Integration
New JVs, collaborationthrough MOUs,
technological
advancements
Backward Integration
New exploration, prospecting,
assistance to state
Horizontal Integration
Overseas expansion,
new minerals, new leases in
India & abroad
Forward Integration
Value addition projects
steel, pellets,critical beneficiation
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NEW PROJECTS
IRON ORE
• 11B in Bailadila
• Kumarswamy Mines
• Sasangada Iron Ore Deposit, Jharkhand
• Ghatkuri Mine, Jharkhand• Ramandurg, Karnataka
• Bailadila Deposit No.13, Chhattisgarh
• Bailadila Deposit No.4, Chhattisgarh
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COAL
Two Coal blocks at Shahpur east and West
STEEL PLANTS
• 3 MT steel plant at Jagdalpur• 2MT steel plants at Bellary, Hosphet
PELLET PLANTS
• 1.2 Mt capacity at Donamalai• 2.0 Mt capacity at Bailadila
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CRUDE STEEL PRODUCTION 2008
SOURCE: STEEL STATISTICAL YEAR BOOK 2009
COUNTRY PRODUCTION (in mt)
Germany 45.83
Italy 30.59
Turkey 26.8
Ukraine 37.28
Russia 68.51
USA 91.35
Brazil 33.71
China 500.31
India 57.79Japan 118.73
S.Korea 53.62
Others 264.6
Total 1329.12
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CRUDE STEEL PRODUTION 2008
STEEL PRODUCTION
3%2%2%3%5%
7%
3%
38%
4%
9%
4%
20%
Germany
Italy
Turkey
Ukraine
Russia
USA
Brazil
China
India
Japan
S.Korea
Others
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YEAR WISE PRODUCTION(IN mt)
YEAR INDIA USA CHINA
1999 24.3 94.27 124.26
2000 26.92 101.8 128.5
2001 29.29 90.1 157.63
2002 28.81 91.59 182.36
2003 31.78 93.68 222.33
2004 32.63 99.68 282.91
2005 45.78 94.89 353.24
2006 49.45 98.58 419.15
2007 53.47 98.1 489.28
2008 57.79 91.35 500.31
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GROWTH RATES
0
50
100
150
200
250300
350
400
450
500
550
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
YEAR
P R O D U C
T I O N
INDIA
USA
CHINA
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• Approved by Government of India in September 2005
SteelProduction
Imports Exports Consumption
2004-05 38 2 4 36
2019-20 110 6 26 90
Major Emphasis:•Critical Input Raw Materials: Iron Ore and Coking Coal•Infrastructure facilities like Roads, Railways and Ports.
Focus: •Human Resources•Technology• Research and Development•Market outlook on prices of steel
•Environmental Concerns.
National Steel Policy-2005
Milion Tonnes
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Indian Potential for Steel
Huge Potential for Demand
•High GDP growth rate of 7%•1 billion population•Low per capita steel consumption of 33kg (World av. 181 kg
GrowthFactors for
India
Abundant Iron Ore
Reserves 23 billion tones
Government Policy• Stable currency• Easing of regulations• Strong Banking &
judicial system
•Encouraging trade relations with ASEAN and
other countries• Infrastructure building
• Exploring new Energy resources
Human Resources
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Critical inputs for Steel Production
–Iron Ore
–Coking Coal
Projected Requirement of Critical inputs
Iron Ore Coking Coal Non CokingCoal
2019-20 190 70 26
2004-05 54 27 13
Raw Materials Requirement
New Additions through BF Route (60%),Electric Arc Furnace (33%), others (7%)
Million Tonnes
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SWOT ANALYSIS FOR NMDC STEELS
Strength
Weakness
Opportunity
Threats
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STRENGHTHS
Abundance of Iron ore
Largest pool of man power
Lower unit labour cost
Vast untrapped domestic market
Good market value of NMDC
Favourable socio political condition
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Item USA UK France Germany India
Energy 24.1 19.8 22.1 23.4 32.9
Iron ore 15.4 12.7 12.7 13.9 5.4
Fluxes & ferroalloys
5.9 7.6 7.6 6.8 8.5
Others 25.6 27.5 27.3 27.1 21.9 Total material 71.0 67.6 69.7 71.2 68.8
Labour 40.7 27.1 36.6 43.4 13.9
Misc taxes 1.9 1.9 4.1 2.4 6.6
Works cost 113.6 96.6 110.5 117.1 89.3
Depriciation andinterest
9.1 6.6 2.4 12.2 10.7
Total cost 122.7 103.2 122.9 129.0 100.0
Comparative cost of steel production, %
Source : IE (I) Journal-MM, vol 82,
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MISMATCH
0
1
2
3
4
5
6
1 2 3 4 5 6 7 8 9
year
i m
p o r t ( m t )
Series1
MISMATCH IN PRODUCTION AND
DEMAND
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WEAKNESS
Lack of Experience in Steel Industry
Huge capital investment
Lack of raw material like Coking coal,
Nickel and ferro molybdenumPoor quality of basic Infrastructure
Low labour productivity
High level of taxation
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• Proven Non Coking Coal Reserves (as on 1.1.2004) - 75.1 BT
• Constitutes 82% of the total coal reserves in India.
271.1 282.8299.1 311.1
331.8
100
1000
1999-2000 2000-01 2001-02 2002-03 2003-04
Non
coking
Coal
productio
n
• Quantitatively, no problem faced by Indian Steel Industry.• Qualitatively, require high grade of non-coking coal for
sponge iron industry.
Non Coking Coal – Indian Scenario
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21.2
19.5
1818.4 18.3
11.8 11.410.7
11.8 11.1
10
15
20
25
1999-2000 2000-01 2001-02 2002-03 2003-04
Coking Coal declined from 33 MT (99-00) to 29.4 (03-04) Significant proportion of coking coal not suitable for metallurgical
purpose. Production of raw coking coal has fallen Washed coal availability would be much lower.
Metallurgical
Non-Metallurgical
Coking Coal – Indian Scenario
Coking
Coalproduction
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Item Unit India Brazil S.Korea Canada Usa Japan Germany
Product quality Index 41 52 61 68 60 93 93
Product design Index 34 57 49 58 70 81 71
On timedelivery
Index 30 36 59 62 63 93 88
After SalesService
Index 41 39 47 63 58 90 79
DistributionNetwork
Index 52 52 57 66 74 72 76
Labour Productivity
Index 6177 7729 9291 30034 44070 46671 38207
Training Index 36 37 47 40 48 79 69
ManagerialInitiative
Index 61 61 68 62 74 72 73
Expenses InR&D
% of GDP
.91 .38 1.63 1.32 2.66 2.85 2.79
InformationTech
Index 44 52 59 63 57 82 87
Major determinants of international competitiveness
Source: Steel and Metallurgy
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OPPORTUNITY
Option for absorption of newer andmodern technology
Can have limitation over workforce
Enormous scope for consumption of steelUnexplored rural market
Export market penetration
Option of choosing the products
THREATS
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THREATS
Threats from competitors
Price sensitivity
Higher quality products from developed
nationsNon availability of capital from financial
institution for steel
Adverse social condition Threats of substitutes
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PRICE RATES
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STRATEGIES
SURVIVAL GROWTH
SHORT TERM PLAN MEDIUM TERM PLAN MEDIUM TERM PLAN LONG TERM PLAN
SHORT TERM PLAN
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SHORT TERM PLAN
To set the plant in
a) Least possible time
b) Least possible cost
To set a modern automated plant
To start the production activity systematically
Infrastructure development
Ensuring raw material availability
Generation and development of Human resources
MEDIUM TERM PLAN
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MEDIUM TERM PLAN
Expansion plans for full fledged productionReview of conditions and transforming activities
Emphasize on low production cost
Switching over from general to focusedmarketing
Emphasize on R & D activity
LONG TERM PLAN
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LONG TERM PLAN
Achieving the vision
Customer & Share holders satisfaction
Achieve excellence in Quality
Facilitates Excellent R&DEnvironmental friendly
Peripheral development
Planning to set up new plants
Plan for further diversifications
FINANCIAL STRATEGY
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FINANCIAL STRATEGY
Repayments of large borrowingManage the cost and time overruns
Ensuring future cost flows
Improve profitability
Develop a deep sense of costconsciousness
Reduction in plant inventory
Participation in influencing policy makers
BUSINESS STRATEGY
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BUSINESS STRATEGY
Systematic approach in setting plants
Focused on the domestic demand
Concentration on core competency
Long term agreement to ensure supply of
raw materialStrategic partnership in non core business
Outsourcing of non core services
Servicing steels
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Requirement of coking coal 70 MT
Likely % available from imports 85%
Strategies envisaged Allotment of new coal blocks to steel industry
Joint Ventures and Equity participation abroad bysteel and coal companies.
Development and Adaption of technologies insynergy with natural resource base (non-cokingcoal).
Investment in beneficiation of coal.
2019-20
Coking Coal – Future Perspectives
OPERATIONAL STRATEGY
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OPERATIONAL STRATEGY
Following closed loop theory of planning, Action, Follow
up and review Active participation in erection and commissioning
activity
Ensuring safety in every aspect
Reduction in scarp, rework and extra labour
Reduction of WIP, inventory levels, material handling
Proper utilization of tools and equipment andoperational efficiency.
Reducing the amount of customer complaints
Minimize the wastages or utilization of waste
TECHNICAL STRATEGY
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TECHNICAL STRATEGY
Selection between proven technologiesand modern technology
Applying automation
Superior quality of finished products.
Increase in productionReduction in cost of production
Reduction in energy consumption
Reduction in environmental pollution
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Purdue Model for Control Hierarchy (5-Level Model)
NameDescription
Level 0 Sensor Level (Measuring Devices):Pressure, Temperature, Speed, Accelerometer, Force, Position, Shape, Thickness, ...
Level 1 Controller Level (Feed-back Closed Loop Control):
Speed Regulator, Tension Regulator, Sequence Control, Position Control, Temperatur Control, SCADA
Level 2 Machine Level (Set-up Models):Temperature model (e.g., EAF, LMF), Shape Control, Mill Set-Up Control, Coil TrackinRunout Table Cooling Control, ..
Level 3 Operation Unit Level:
Blast Furnace, Electric Arc Furnace, LMF, Caster, Reheating, Hot Mill, Cold Mill, AnneLine, Pickle Line, ...
Level 4 Plant Level MES, MRP:Scheduling, Material Flow, Manufacturing Execution System (MES)...
Level 5 Corporate Level CRM, TMS, ERP:Order Process, Enterprise Resource Planning (ERP)...
R & D STRATEGY
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R & D STRATEGY
Optimization of existing process technology
Maximizing quality of steel Development of high value steels
Reduction in specific consumption rates of rawmaterials
Improving physico chemical properties of RM
Improvement of BF productivity
Technologies of preheat treatment of hot metal
Reduction of energy requirements
Making the plant pollution free
Technology and knowledge transfer
HR AND CSR STRATEGY
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HR AND CSR STRATEGY
Attracting candidates with experience orexpertise in erection and commissioning of steel plant
Organizing workshop for the workingemployee
Developing infrastructure around the area
Maintaining social harmony
Peripheral development
ENVIRONMENT STRATEGY
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ENVIRONMENT STRATEGY
Plantation around the steel plant
Recycling of water and water waste
Set target to reduce energy consumption
Recycling of byproducts
Target to reduce air and water emissions andgeneration of hazardous waste
Target to recycle, recovery and/or reuse of spent refactories