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[28th Issue Steel Re Rolling Mills Association of India visit www.srma.co.in Page 2

SRMA STEEL NEWSLETTER

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Steel Re Rolling Mills Association of India

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Steel Re-Rolling Mills Association of India www.srma.co.in Email : [email protected]

Sl. No, Name

1. Shri B.M. Beriwala, Chairman

2. Shri Jagmel Singh Matharoo, Vice Chairman

3. Shri Ramesh Kumar Jain, Treasurer

4. Shri Sanjay Jain Committee Member

5. Shri Kailash Goel “

6. Shri Om Prakash Agarwal “

7. Shri Sushil Sharda “

8. Shri Sandip Agarwal “

9. Shri S S Sanganeria “

10. Shri Sanjay Surekha “

11. Shri R P Agarwal “

12. Shri S S Bagaria “

14. Shri Girish Agarwal “

15. Shri Goutam Khanna “

16. Shri Suresh Bansal “

17. Shri Rajiv Jaiodia

“

18. Shri Bhusan Agarwal

“

19. Shri Mahesh Agarwal

“

20. Shri Sita Ram Gupta

“

21. Shri G P Agarwal

“

22. Shri Suresh Goyal

“

23. Shri Hari Mohan Beriwala

“

24. Shri Sitaram Agarwal “

25. Shri Sonal Mittal

“

26. Shri Avinash Bagla

“

27. Shri Shankar Lal Agarwal

“

28. Shri Dipak Agarwal

Sp. Invitee

29. Shri Vivek Adukia

“

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SRMA Steel News is a division of Steel Re-Rolling Mills Association of India and takes due

care in preparing this news. Information has been obtained by SRMA from sources, which it

considers authentic. However, SRMA does not guarantee the accuracy, adequacy or

completeness of any information and is not responsible for any errors or omissions or for the

results obtained from the use of such information. SRMA is not liable for investment decisions,

which may be based on the views expressed in the News. SRMA especially states that it has no

financial liability whatsoever to the subscribers/users/transmitters/distributors of this News. And

no part of this news may be published/reproduced in any form without SRMA’s prior written

approval.



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Executive Summary

Trends of Domestic Steel Consumption

Minutes of the Meeting with the stakeholders under the

Chairmanship of Joint Secretary, Ministry of Steel

Environment & Safety

Skill and Unskilled Manpower Scenario

Taxation

Events

Latest Steel News

CONTENTS



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In the period of independence in 1947, India had only three steel plants – the Tata Iron & Steel Company, the Indian

Iron and Steel Company and Visveswaraya Iron & Steel Ltd and a few electric arc furnace-based plants. In that era

witnessed of a small but viable steel industry in the country, which operated with a capacity of about 1 million tonne

and was completely in the private sector. India has now risen to be the 4th largest crude steel producer in the world

and the largest producer of sponge iron. As per official estimates, the Iron and Steel Industry contributes around 3

per cent of the Gross Domestic Product (GDP). From a negligible global presence, the Indian steel industry is now

globally acknowledged for its product quality.

The first main 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 equalisation policy: To ensure balanced regional industrial growth.5.Controls on imports of inputs, including

technology, capital goods and mobilisation of finances and exports.

The quick 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 2005 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 2005 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 National Steel Policy 2005 (NSP 2005) was formulated at a time when the Indian steel industry had just moved

into a higher growth path with showing promises of a significant resurgence and it enunciated important

milestones/physical targets and an overarching broad policy framework to achieve the stated end on an assumed

6.9% growth in steel consumption, 7.3% growth in steel production and a 23% share of exports in total production

by the year 2019‐20.

Aims of The National Steel Policy 2012 for transforming Indian steel industry into a global leader in terms of production,

consumption, quality and techno‐economic efficiency while achieving economic, environmental and social sustainability. The

vision of NSP 2012 is to ensure availability of quality steel to accelerate growth of the domestic economy and provide amenities

of life to the people of India at par with the developed world. The development of domestic steel industry has to be guided by

long‐term national goals and perspectives. National Steel Policy has, therefore, to be dynamic taking into consideration the

changing needs of the industry in view of significant changes in the domestic and global economic environment. In particular, it

was felt that a strong policy push is required to expedite creation of green‐field steel capacity as growth in steel supply has not

been keeping pace with rise in domestic demand for steel. It was also felt that policy making should address the issues related to

sustainable growth especially related to long term availability raw materials, protection of environment, inclusive growth, quality

of steel products and Research & Development (R&D) with greater focus.

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Domestic real consumption of total finished steel stood at 73.48 million tonnes(mt) during

2012-13, a growth of 3.5 percent over 2011-12, a growth rate which reflects the trends in

economic growth of as observed during the said year. This does not come as a surprise

given:

a) the record low growth of 4.5 percent of GDP during 2012-13 and

b) the decline of IIP by (-1) percent in 2012-13

c) the steep decline noted in sectors like Capital Goods and slow growth of sectors

like Manufacturing, Basic Goods, Intermediate Goods and Consumer Durable

d) the sluggishness in the growth of the index for eight core or infrastructure

industries which grew by 2.6 percent during 2012-13

e) the slowing down of rate of investment as indicated by the growth rate of GFCF

in GDP

The trend of last five years is shown below and indicates that though the marginal growth

rate of 0.43 percent in 2008-09 may be attributed to the impact of the recession of 2008, markets had recovered thereafter,

pushing up steel consumption growth to a five-year high of 13.3 percent in 2009-10 – a growth rate which also owes to some

extent to a low base effect. Nonetheless, since then, though in absolute terms, the volume of steel consumed in the economy has

gone up, yet the year-on-year (yoy) growth rates have steadily dropped, the drop in later – days attributable to the onset of the

slowdown in the Indian economy itself.

Trends in Total Finished Steel Consumption

Year Quantity % yoy change

2008-09 52.35 0.43

2009-10 59.34 13.3

2010-11 66.42 11.9

2011-12 71.02 6.9

2012-13 73.48 3.5

Source : JPC

Major observations :

Real consumption of total finished steel increased by a mere 3.5 percent

during 2012-13 to touch 73.48 mt in 2012-13 as compared to 71.02 mt

recorded during 2011-12.

In a change driven to quite an extent by the slowdown in the manufacturing /

consumer durables segment, flat steel accounted for 45 percent and non-flat

steel, 55 percent of the total finished steel consumption in 2012-13, inching

up and dropping respectively by four percentage points each during the year

as compared to 2011-12.

In absolute terms, total finished steel consumption was led by non-flat steel

(40.22 mt) which recorded a growth of 10.4 percent on yoy basis while

growth rate declined for flat steel consumption (33.26 mt) by nearly 4

percent during the year.

The relative situation of non-alloy and alloy steel consumption growth scenario during

2012-13 over 2011-12 is given below and indicates that volume-wise, domestic

finished steel consumption continues to be driven by non-alloy steel consumption (92

percent share) while the alloy steel sector still remains a niche but important/emerging contributor.

Performance Trends : Category-wise - The table below shows detailed consumption data (after accounting for double

counting) for major categories of finished steel in 2012-13 over 2011-12 and indicates the key growth drivers/pockets of growth

during the reference period.

Category – wise Trends

Category Real Consumption (‘000t)

2012-13 2011-12 % yoy change

Bars & Rods 29,445 28,048 5.0

Structurals 5,987 4,950 20.9

Railway Materials 946 869 8.9

a) Non - Flat 36378 33867 7.4



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Plates 4,891 4,957 -1.3

H.R.Coils / Skelps 19,817 16,948 16.9

H.R.Sheets 485 489 -0.8

C.R.Sheets/coils 8,807 8,173 7.8

GP/GC Sheets 5,230 4,538 15.2

Elec. Sheets 541 422 28.2

Tinplate (incl. ww) 434 372 16.7

TMBP 5 6 -16.7

Pipes (Large Dia.) 2046 1554 31.7

Tin free steel 82 63 30.2

b) Flat 42338 37522 12.8

c) Less : Double Counting 11,094 5,364 -

d) Flat Steel after double counting 31244 32158 -2.8

e)Total : Non Alloy (a+d) 67622 66025 2.4

f)Total : Alloy 5860 4996 17.3

Total Finished Steel (e+f) 73482 71021 3.5

Source : JPC

Per Capita Steel Consumption - In tune with the absolute levels reached

and the prevailing economic/steel market conditions, India’s per capita steel

consumption (in terms of total finished steel) has grown from 45 kg in 2008-

09 to 60 kg in 2012-13. Though this is commendable, yet the fact remains

that compared to global average(222 kg) or even India’s global peers (China

:489kg), per capita consumption of steel is distinctly low in India, one of the

main reasons of such an outcome being the extensive use of steel in large

scale infrastructure activities and other end-use segments of steel like

manufacturing in developed countries or even in countries like China, South

Korea vis-à-vis India.

India’s Global Status - The steady growth in the domestic steel

consumption has elevated India to the status of the 3rd largest consumer of

steel globally in 2009, a status it had successfully maintained in 2012 also,

as per data released by the WSA. The table below shows the top 10 steel

consumers of the world in 2012 and indicates that after China, the largest

steel consumer and the USA, India ranked as the 3rd largest steel consumer during the year and accounted for 5 percent of total

consumption of steel globally.

Consumption of Total Finished Steel - 2012

Rank Country Qty (mt)

1 China 660

2 United States 96

3 India 72

4 Japan 63.9

5 South Korea 54

6 Russia 42

7 Germany 37

8 Turkey 28

9 Brazil 25.1

10 Italy 21

Total : Top 10 1099

World Steel Consumption 1432

Source : World Steel Association

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International standards for safety and health in the workplace The largest steel companies have their own safety and health standards and

most countries have their own legislation on occupational safety and health.

These minimum legal regulations must always be respected. The most

commonly used international set of standards on occupational health and

safety management systems is the British Standards BS OHSAS 18001.

Compliance with this standard demonstrates a company’s commitment to

continually check and improve its safety and health performance. BS OHSAS

18001 is often combined with similar standards such as Environment

Management System (ISO 14001) and Quality Management System (ISO

9001). These are best combined into an integrated management quality-safety-

environment system (QSE). Many steelmakers standards and systems exceed

these standards and as a rule they choose to adopt the highest standard

available within the industry regardless of the minimum country standards that might apply.

Your contribution to the Accident-Free Steel project Increased contribution from all steelmakers in worldsteel’s safety and health activities will enable progress towards

the ‘zero’ goal: an injury-free, illness-free and healthy workplace. By promoting, completing, and supporting

worldsteel’s safety and health activities within your company, you can contribute to prevent serious safety incidents.

Don’t hesitate to contact the worldsteel safety team for any further information or suggestion.

worldsteel safety team Henk Reimink | Director Safety, Technology and Environment World Steel Association [email protected] | T:

+32 (0)2 702 89 39 | worldsteel.org

Patrick Benedetti | Manager - Safety and Health World Steel Association [email protected] | T: +32 (0)2

702 89 25 | worldsteel.org

Rebecca Sear | Assistant World Steel Association [email protected] | T: +32 (0)2 702 89 31 | worldsteel.org

Resent primary aims, for the government of India today, is to encourage inclusive growth

across all states. In order to accomplish the same, it is important to keep in mind the supply

and demand of labor across different regions. Therefore, skill development initiatives should

be designed, keeping in account the regional imbalances. Aon Hewitt, in its analysis

discovered that informally, most of the blue collared labor gets sourced from the states of

Bihar, Rajasthan, UP, and Chattisgarh in the northern sub continent. Andhra Pradesh

occupies the same position in south. The labor demand estimates, especially for roads, SEZs

(industrial area) and energy projects, were analyzed. The analysis helped us shortlist the top

five skills required for all the Indian states. Also, It was observed that masons and machine

operators are the top two trades that are in demand for every state.

It has been already established, that the only source of formal training, for the infrastructure

industry, is through ITIs and in-house industry training programs. Analyzing the share of blue collared workforce catering to the

construction sector, it was observed that Andhra Pradesh, Rajasthan, Uttarakhand, and Madhya Prasesh train the maximum

workforce for this sector. When the economy’s growth rate picked up from 3.5 per cent per annum between 1950 and 1980 to 5.4

per cent per annum between 1980 and 1990 some signs of a skills shortage started to show up. However, the policy discourse

changed dramatically once the GDP growth rate jumped to 7.3 per cent during the 10th Five Year Plan period (2002-2007). For

the first time in the history of Indian planning, the 11th Five Year Plan document (Planning Commission) introduced a chapter on

skill challenges facing the nation. The increase in the GDP growth rate has been one reason for

realizing skill shortages in the Indian economy.

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How realistic is 347 million incremental skilled workers requirement projection by

NSDC As per the estimates of a study commissioned by NSDC, incremental shortfall

for personnel (both skilled and unskilled) by the year 2022 will be 347 million in the

non-agricultural sectors. This is actually an over estimation of the workforce for the

following reasons: 1. The present workforce in the country is 460 million. If we add 347

million to the present workforce of 460 million, the workforce in the year 2022 will be

at least 807 (460+347) million.

2. The 347 million reported is only in 20 focus non-agricultural sectors, including

informal employment. If we add 200 million agricultural sector workforce (assuming

that workforce dependent on agriculture come down by 40 million in the next 10 years

and the economy maintains a reasonably high growth rate of 7-8 per cent per annum for the next 10 years), the size

of the workforce will cross 1000 million. Added to this, if the workforce of the remaining sectors (other than the 21

high growth sectors) is included, this number will go up further. Implying, that the workforce for the entire economy

will be well over 1000 million in the year 2022. 3. As explained in scenarios one and three, total labour force cannot

be more than 585 given that the population in the age group 15-59 years in 2022 will be 880 million as per Census

estimates. 4. Therefore, more than 1000 million workforce that we are arriving at based on the 347 million

incremental persons needed in 2022 is clearly a huge outlier and gross over estimation. [source NSDC]

TAXATION NEWS

MINISTRY OF FINANCE

(Department of Revenue)

NOTIFICATION NO. 43/2014

New Delhi, the 16th

September, 2014

INCOME-TAX S.O. 2399(E).—In exercise of the powers conferred by Section 295 read with Section 32 of the

Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the

following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (8th Amendment) Rules, 2014.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in the New Appendix I, in Part-A relating to Tangible Assets,

under the heading III. Machinery and Plant, in item (8), in sub-item (xiii), –

(a) In clause (l), for the words, figures and letters “installed on or before 31st day of March,

2012”, the words, figures and letters “ installed on or after the 1st day of April, 2014” shall be

substituted; and

(b) In clause (m), for the words, figures and letters “installed on or before 31st day of March,

2012”, the words, figures and letters “installed on or after 1st day of April, 2014” shall be

substituted.

[F.No.152/1/2013-TPL]

RAJESH KUMAR BHOOT, Director (TPL)

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EVENTS

From 28-30 October 2014, Messe Duesseldorf India with its parent company, Messe Duesseldorf GmbH {organiser

of wire and TUBE Duesseldorf, GIFA,

METEC, THERMPROCESS and NEWCAST (GMTN)} and MESSE ESSEN GmbH (organiser of Schweissen &

Schneiden), will organise 4 leading trade fairs for the metals industry in India. They are Metallurgy India 2014, Wire

& Cable India 2014, Tube India International 2014 and INDIA ESSEN WELDING & CUTTING 2014 in

halls 1, 5 and 6 at the Bombay Convention & Exhibition Center, Goregaon (East), Mumbai.

Middle East Steel Conference(MESC) 2014

Date : 21st – 23rd October, 2014

Venue : Inter Continental, Festival City, Dubai, UAE

STEEL NEWS

Indian steel mills call for hiking custom duty to curb cheap imports from China

(Follow @steelguru on Twitter for important updates)

Indian Express reported that the Indian government is planning to recommend a safeguard duty to contain imports of cheaper

steel from abroad, especially from China.

The report said that the move has been planned to pacify domestic steel companies, who are campaigning against a surge in

cheaper imports of both long and flat steel products from China flooding the local markets. Steel produced in other nations like

Japan, South Korea, Ukraine is also finding its way into the country.

Chief executives of 6 major steel mills on Tuesday evening met steel and mines minister Mr Narendra Singh Tomar to convey

that while they are battling steep rise in input costs and sluggish market conditions, the rise in cheaper steel imports has

aggravated their woes.

A source privy to the meeting said that “A general consensus emerged during the meeting that a credible way to contain the

cheaper imports would be to impose a safeguard duty.”

The steel makers had told the ministry last month that imports from China exceeded the historic high and there is a pressing need

to contain it. They also suggested doubling the import duty on value-added steel products to 15% ad-valorem from 7.5%.

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According to the data available with Steel Guru’s Market Intelligence Service, given below are the current offers for various

import items CFR India and conversion to landed prices net of MODVAT considering 5% and 7.5% import duty for longs and

flats respectively

Item Size Grade CFR in USD Landed in INR

WRC 5.5-10 Drawing 445-465 30000-31000

Rebar 10-32 Fe 500 460-480 31000-32000

HRC 2.5-10 Pipe Grade 510-530 35000-36000

HRC 1.8-3.0 CR Grade 540-560 37000-38000

CRC 0.8-2.0 DC01 595-615 40500-41500

Plates 12-100 SS 400 520-540 35500-36500

Source – Market Intelligence Services, Steel Guru

Visit http://prices.steelguru.com/ to know more about the services

Separately, the steel ministry has last week sought the finance ministry’s intervention in asking officials from customs and other

departments to ascertain the quality of imported steel before allowing entry. The steel makers have also alleged that the Chinese

try to calibrate their product mix to bypass the defined quality standards under the Quality Control Order 2012 and import

classification.

Source – Indian Express

Get latest updates through Twitter – Follow @steelguru

(www.steelguru.com)

India steel projection demand on GDP elasticity needs to be moderated (Follow @steelguru on Twitter for important updates) Mr Sushim Banerjee DG of INSDAG wrote in Financial Express that not only GDP growth but GDP composition impacts steel consumption as well, the near stagnant share of secondary and manufacturing sectors is what pulls down steel consumption growth in India. There is also a widely-held perception that although the steel-GDP inter-relationship provides a long-term elasticity factor (based on the past series) that is used for projecting future demand for steel, there exists an inflexion point in the GDP growth chart that explains the yearly fluctuating relationship between steel consumption and GDP growth. If GDP growth exceeds this threshold, steel consumption growth would be higher due to higher GDP elasticity and if GDP falls below the level, steel consumption would drop down at a much higher rate. This hypothesis owes its origin to another theory of relationship of steel consumption with growth of per capita income of a country with a threshold limit of USD 1000 which had many exceptions and is not being talked much. Historically some examples can be cited. In 1993-94 GDP grew by 5.7%, respectable growth by the so-called Hindu standard, steel consumption was a mere 1.9%. That year the construction sector miserably failed at 0.6% which must have pulled down steel demand, considering the predominance of construction in India’s economic growth in the early 90s. GDP growth in 1993-94 was contributed by 7.4% growth in the tertiary sector. Next year being the watershed year for steel, it experienced a hefty 21.3% growth against 6.4% growth in GDP. Manufacturing went up by as high as 10.8% and boosted steel demand.

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However, enhanced steel availability from emerging private sector steel plants had a positive impact on steel consumption. It may be noted that the secondary sector went up by 9.2% in that particular year. In 1996-97, the country witnessed 8% growth, but steel consumption went up by a meagre 4.1% as construction sector grew disastrously at 1.9%. In 1998-99 the GDP growth of 6.7% was accompanied by only 3.8% growth in steel consumption because manufacturing had dropped to 3.1% and secondary sector to 4.1%. This year GDP growth was primarily led by 8.3% growth in the tertiary sector. In 2002-03 growth of GDP at 3.9% saw steel consumption grow by more than double the rate at 7.6%, pushed up by manufacturing and construction at 6.9% and 8.3%, respectively. The following year saw both GDP and steel consumption growing at 8% with construction reaching 12.4% growth. Source – Financial Express Get latest updates through Twitter – Follow @steelguru (www.steelguru.com)

OECD raises Indian economy grow forecast to 5.7pct for 2014 (Follow @steelguru on Twitter for important updates) Sharply revising upwards its forecast, Paris-based think tank Organisation for Economic Cooperation and Development on Monday projected 5.7% growth for the economy this year, even as global recovery continues at a moderate pace. Its latest estimate is way higher than the 4.9% growth projection in May this year. The Organisation for Economic Cooperation and Development (OECD) said that "Growth in India is projected to pick up and Brazil will experience a modest rebound from recession India will grow by 5.7% in 2014 and 5.9% in 2015." OECD said that a moderate expansion is under way in most major advanced and emerging economies. OECD said that the country has the opportunity to achieve faster and more inclusive growth. It said that India needs to improve fiscal consolidation by shifting from subsidies to investment in social and physical infrastructure, control inflation and improve financial stability. The grouping said that the country should improve infrastructure, simplify labour laws and pursue tax reforms. India's economic growth accelerated to 5.7% in April to June quarter, much better than 4.7% in the same quarter of previous fiscal. Government expects growth in current fiscal to be between 5.4% to 5.9%. The economy grew by sub-5% in 2012-13 and 2013-14. Source – PTI = Get latest updates through Twitter – Follow @steelguru = (www.steelguru.com)

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