SAIL- Strategy Rakesh Kulshreshtha Executive Director I/C [Corporate Planning] Resurgent India Vision 2020 in Metals & Minerals Sector

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1 Indian Institute of Metals Delhi Chapter SAIL- Strategy 2020 Resurgent India Vision 2020 in Metals & Minerals Sector Rakesh Kulshreshtha Executive Director I/C [Corporate Planning]

2 CONTENT OF THE PRESENTATION CORE STRATEGY JOINT VENTURES / STRATEGIC ALLIANCES SAIL A BRIEF DESCRIPTION MODERNIZATION & EXPANSION OUR VISION FOR THE FUTURE

3 AN INTRODUCTION ABOUT SAIL 3

4 SAIL - LARGEST STEEL PRODUCER IN INDIA FY2012 saleable steel production of MT Identified modernisation and expansion plan expanding capacity to 20.23MTPA of saleable steel by FY2013. Second largest iron ore mining operations in India One of only five PSEs in India accorded Maharatna status FY2012 turnover of over Rs. 50,000 crores 4

5 ...WITH AN ESTABLISHED AND SUCCESSFUL OPERATING TRACK RECORD... Over 50 years of experience in the steel sector 5

6 ...AND STRATEGICALLY LOCATED OPERATIONS Manufacturing Facilities Plant Current capacity (MTPA) FY12 Production (MT) Planned Installed Capacity (MT)* Total Current Saleable Steel Capacity FY12 Saleable Steel Production Total Saleable Steel Capacity Post Expansion MTPA MT MTPA Integrated Steel Plants Bhilai Steel Plant Durgapur Steel Plant Rourkela Steel Plant Bokaro Steel Plant IISCO Steel Plant Special Steel Plants Salem Steel Plant Alloy Steels Plant Visvesvaraya Iron & Steel Plant Total Note: Capacity numbers refer to saleable steel capacity * After implementation of Modernisation & Expansion Plan 6

7 FULLY INTEGRATED PRODUCER WITH STRATEGICALLY LOCATED OPERATIONS... Five integrated steel plants and three special steel plants located principally in eastern and southern India Easy and cost efficient access to raw materials Ready supply of substantial portion of raw materials 7

8 ...AND ACCESS TO LARGE RESOURCE BASE Access to large captive raw material base Second largest mining operations in India in FY % iron requirement in FY10 met through captive supplies Plans to ramp up existing mines to meet post expansion requirements 41% of dolomite and 38% of limestone requirements in FY10 met through captive soruces Developing new coking coal mines at Tasra and Sitanala Large land bank Sizeable land bank provides flexibility for expansion and growth at existing locations Relative selfsufficiency in power Owns and operates four captive power plants (aggregate cap. of 211 MW) 50% interest in four captive power plants (aggregate cap. of 1,116 MW) Approximately 70% of FY12 power requirement sourced through captive sources Large skilled manpower base 106,000 full-time employees including over 15,000 executives Reducing employee cost/tonne expanded capacity planned to be operated with the current number of employees Emphasis on skill based training to remain competitive 8

9 DIVERSIFIED PRODUCT MIX SUPPORTED BY STRONG DISTRIBUTION AND SALES NETWORK Sales Breakup by Products Plates 20.6% Pipes 0.5% Semis 10.9% Rods / bars 16.7% Coated products 2.0% CR coils / sheets 6.7% Structurals 7.1% HR coils / sheets 28.2% Railway materials 7.3% 9

10 Vision To be a respected world-class corporation and the leader in Indian steel business in quality, productivity, profitability and customer satisfaction Credo We build lasting relationships with customers based on trust and mutual benefit. We uphold highest ethical standards in conduct of our business. We create and nurture a culture that supports flexibility, learning and is proactive to change. We chart a challenging career for employees with opportunities for advancement and rewards. We value the opportunity and responsibility to make a meaningful difference in people's lives. 10

11 SAIL s LONG TERM STRATEGY FOR GROWTH 11

12 SAIL strategically continues to be an integrated steel producer, producing steel by the BF-BOF-CC route. Critical to its competitiveness and sustainability is access to key raw materials iron ore and coking coal. Strengths of SAIL is its captive iron ore mines near the steel plants. In India, there are rich and sufficient endowments of iron ore and non-coking coal. Choice of technology to use indigenous raw-materials.

13 Raw-material and resources supply businesses Upstream Supporting Businesses Diversification in related businesses SAIL s Core Business - Steel Downstream End Use Industries Business Supporting Businesses Diversification in related businesses Railway track expansion & up gradation projects Metro rail / light rail urban transportation projects Logistics solutions Production of rolling stock (wagons, coaches etc) Waste Management Other Related Businesses Engineering Workshops Prefabricated structures in steel Brand exploitation in related businesses Manufacturing of equipment & machinery Power generation & transmission (incl. Renewable Energy]

14 MODERNISATION & EXPANSION PLAN 14

15 MODERNISATION & EXPANSION PLAN Capacity build-up as per current expansion plan envisages : Particulars Installed Capacity (Million tonnes) After Current Phase Hot metal Crude Steel Saleable Steel

16 MODERNISATION & EXPANSION PLAN: SALEM Production Build-up million tonnes Installed cap. After Expn Crude Steel Saleable Steel Major Facilities New Steel Melting Shop (180,000 tpa) New Cold Rolling Mill Complex (146,000 tpa) Up-gradation of Existing Cold Rolling Mill Roll grinder for Hot Rolling Mill

17 MODERNISATION & EXPANSION PLAN: IISCO Production Build-upup Installed cap. After Expn Hot Metal Crude Steel Saleable Steel million tonnes Major Facilities Coke Oven Battery (0.78 million tonnes), Sinter Plant (3.8 million tonnes) Blast Furnace (4060 m 3 ) with Top Pr. Recovery Turbine (2.7 million tonnes) Basic Oxygen Furnace (BOF) Shop (2.56 million tonnes) Billet Caster (1.67 million tonnes) and Beam Blank/ Bloom Caster (0.8 million tonnes) Heavy Section Mill (0.6 million tonnes), Wire Rod & Bar Mill (1.25 million tonnes)

18 MODERNISATION & EXPANSION PLAN : BHILAI Production Build-upup Installed cap. million tonnes After Expn Hot Metal Crude Steel Saleable Steel Major Facilities Coke Oven Battery-11 (7 m tall); 2 nd Sinter M/c in SP-3 Blast Furnace (4060 m 3 ) Steel Melting Shop III (4.0 million tonnes) New Casters Bar & Rod Mill (0.9 mt), Universal Rail Rolling Mill (1.2 million tonnes)

19 MODERNISATION & EXPANSION PLAN: ROURKELA Production Build-upup million tonnes Installed cap. After Expn (Mt) Hot Metal Crude Steel Saleable Steel Major Facilities 7m tall Coke Oven Battery, Sinter Plant (1x360 m2) Blast Furnace (4060 m 3 ), 3 rd BOF, LF, RH-OB Single strand slab caster New plate mill 4.3m (1.0 million tonnes)

20 MODERNISATION & EXPANSION PLAN: BOKARO Production Build-upup Installed cap. After Expn (Ph-I) Hot Metal Crude Steel Saleable Steel Major Facilities Rebuilding of COBs with Pollution Control measures Upgradation of one Blast Furnace million tonnes Upgradation of existing SMS-II to 3.35 million tonnes from 2.85 million tonnes New Cold Rolling Mill Complex (1.2 million tonnes)

21 MODERNISATION & EXPANSION PLAN: DURGAPUR Production Build-upup million tonnes Installed cap. After Expn (Ph-I) Hot Metal Crude Steel Saleable Steel Major Facilities RMHS & Coal handling facilities; Up-gradation of By Product Plant, Dolomite plant, LF New slag yard Rebuilding of Coke Oven Battery-2 Bloom-cum round caster (0.75 million tonnes) Medium Structural Mill (1.0 million tonnes)

22 SAIL BROWN FIELD EXPANSION TO REACH ITS ULTIMATE CAPACITY The brown-field expansion potential of the integrated steel plants has been assessed based on: Existing facilities Facilities under Ongoing Modernization/Expansion Plan-Phase Phase-I Facilities that could come Modernization/Expansion Plan-Phase-II under Ongoing Capacity Expansion Plan based on exploiting full brown-field capacity of integrated steel plants at their existing locations Realization in a phased manner

23 JOINT VENTURES / STRATEGIC ALLIANCES 23

24 CURRENT JOINT VENTURES / STRATEGIC ALLIANCES FOCUS AREA ALLIANCE PARTNER OBJECTIVE POWER JVs with NTPC and DVC for power plants for captive consumption CEMENT SHIPPING Bokaro Jaypee Cement Ltd is operating a 2.1MTPA cement plant at Bokaro Bhilai Jaypee Cement Ltd is operating a 2.2MTPA cement plant at Bhilai JV with Shipping Corporation of India for shipping of imported coking coal WAGON MANUFACTURE JV for manufacture of specialized wagons E-PORTAL JV with Tata Steel to promote e-commerce activities in steel and related areas 24

25 CURRENT JOINT VENTURES / STRATEGIC ALLIANCES FOCUS AREA ALLIANCE PARTNER OBJECTIVE TECHNOLOGICAL UPGRADATION MoU with Kobe Steel to explore employment of ITmk3 single step furnace technology. RAW MATERIALS International Coal Ventures Ltd set up as JV with CIL, RINL, NMDC and NTPC to acquire coal assets globally JV with MOIL to produce ferro-manganese and silicomanganese to lower cost of steel production MoU with NMDC to jointly develop limestone mine in Himachal Pradesh with expected capacity of 3MTPA S&T Mining JV with Tata Steel for acquisition and development of coal blocks/mines 25

26 EMERGING ALTERNATIVE IRON MAKING TECHNOLOGIES Blast furnace is the most acceptable iron making technology for mass production; offers economies of scale. Drawbacks: Energy intensive Environmental Pollution Requirement of prepared burden Emerging Alternative Iron Making Technologies No need for coke oven, sinter plants Less Capex Environmental friendly Use non coking coal, lean iron ore

27 Iron ore: SUPPLY CHAIN MANAGEMENT 1. The future steel plants to use more quantities of beneficiated iron ore 2. Use of pellets and micro fines in sintering to increase Coking Coal: Reducing dependence on coking coal through following: Increasing auxiliary fuel consumption (primarily CDI) and nut coke to the extent possible. Use of higher content of semi coking and non-coking coal in the coke oven blend through use of technologies like Stamp charged batteries, etc. Introduction of alternate iron making technologies which can use non coking coal and iron ore fines.

28 TECHNOLOGIES TO REDUCE WATER & SPECIFIC ENERGY CONSUMPTION Future steel plants would target zero discharge of water through extensive closed circuit cooling and through extensive dry cooling. Adoption of technologies which eliminate processes like Adoption of technologies which eliminate processes like sintering and coke making (thus reducing heating and cooling cycles) would also contribute towards reducing CO2 emissions and water consumption.

29 JV WITH KOBE STEEL FOR ITMK3 TECHNOLOGY SAIL and Kobe Steel, Japan to jointly set up a 0.5 million Tonnes per annum ITmk3 technology based iron nugget plant at SAIL s Alloy Steel Plant, Durgapur. Latest technology developed by Kobe Steel, Japan, to produce premium grade Iron nuggets, using low grade Iron Ore Fines and non-coking Coal. One of the largest technologies where downstream facilities will become energy efficient. Running successfully in Minnesota Plant

30 ITMK3 PROCESS: PRODUCTION OF IRON NUGGETS Disadvantage in DRI: gangue remains within it Kobe Steel, Japan: ITmk3 Ore + coal composite pellets: Reduction & melting at 1500C in RHF It produces almost low sulphur pure iron nuggets (& slag globules) 0.25 mtpy plant at Minnesota, USA 30

31 31 IRON NUGGETS

32 HAJIGAK DEPOSITS

33 BACKGROUND - HAJIGAK The Hajigak Iron Ore Deposit is situated in the mountainous Bamyan Province, 130 kms. West of the Afghanistan Capital, Kabul. Hajigak deposit comprises of four iron-ore blocks (A,B,C & D) having estimated reserves of 1.8 bn. Tonnes of high grade Magnetite ore (62-64% Fe). Presence of coking coal & other raw material source makes it exceptionally favourable target for economic development.

34 HAJIGAK BIDDING Submission of bid by Afghan Iron and Steel Company (AFISCO), a consortium of seven leading Indian steel and mining companies in India : SAIL (Lead Consortium Member) RINL NMDC JSW JSPL JSW Ispat Limited Monnet Ispat and Energy Selected as Preferred Bidder for three blocks (B, C & D) of the Hajigak Iron ore deposits and Reserved Bidder for the Á block.

35 HAJIGAK IRON ORE DEPOSITS, AFGHANISTAN SAIL led Consortium of seven (7) public and private sector companies - Preferred party for the three out of four iron ore blocks of Hajigak deposits, Afghanistan. Development of iron ore resource to its optimum capacity; Value-addition by setting up a steel manufacturing facility; Power plant; Development of Rail & Road infrastructure and CSR activities Negotiations are ongoing with the Afghanistan Government.

36 SETTING UP OF A GREEN FIELD INTEGRATED STEEL PLANT IN SINDRI GoI allotted land and other assets of the closed unit of FCIL at Sindri, Jharkhand to SAIL in August acre land available for the project. To incorporate 3 JVs for setting up a steel plant, Urea Plant at Sindri, power plant and township services. SPV SAIL-Sindri Projects Ltd. incorporated in Nov. 11 Firmed up proposal submitted to Ministry of Fertilizer. Final Clearance from BIFR awaited for initiating further activities. Project related activities shall commence thereafter

37 SAIL-RITES JV PROJECT SAIL RITES Bengal Wagon Industry Private Ltd. with 50:50 shareholding. The Wagon manufacturing plant to undertake fabrication of 1500 wagons per annum. The plant is being set up at SAIL Growth Works, Kulti and construction work is in full swing.

38 OTHER RAILWAY PROJECTS Setting up a wagon components (Cast steel Bogies, Couplers and related products) manufacturing facility as a 50:50 JV with Indian Railways. The plant to be set up on the land under possession of BSCL at Jellingham, West Bengal. JV Agreement signed between SAIL & BSCL, a PSU under Ministry of Railways. Incorporation of JV under progress.

39 INITIATIVES IN POWER Augmentation of power 750 MW additional Power facility planned at Bhilai and Rourkela through NSPCL Renewable Sources of Power Various State Electricity Regulatory Commissions have made mandatory (for users of Captive power) to use up to 5% of captive power from Renewable Energy Sources. (out of this 1% has to be from Solar Power). Planned to install renewable energy based power plant in JV (80 MW).

40 SAIL S VISION FOR THE FUTURE 40

41 SAIL S VISION FOR THE FUTURE SAIL aims to maintain its market leadership position Realizing the assessed potential in a phased manner. Greenfield opportunity e.g. Greenfield facility at Sindri, overseas opportunities Earn revenue from non-steel business where synergy exists Power strategy - To be a surplus power producer Renewable Energy [Solar & Non-Solar] Refractories & ferro-alloys Rail Transportation identified as a growth opportunity in the value chain

42 SAIL S VISION FOR THE FUTURE Earn revenue from non-steel business where synergy exists Waste Management Prefabricated structures in steel & cement Brand extension in related businesses Logistics Manufacturing of equipment & machinery

43 THANK YOU