Interview with S.K. Roongta, Chairman, SAIL.
S.K. ROONGTA assumed charge as Chairman of the Steel Authority of India in August 2006. An engineering graduate from BITS, Pilani, and a post-graduate in international trade from the Indian Institute of Foreign Trade, New Delhi, Roongta started his career in 1972 as a marketing executive in SAIL, and held several vital positions in the organisation, including as Director (Personnel) and Managing Director of the Durgapur Steel Plant. According to him, SAILs expansion plan will enable it to incorporate state-of-the-art technology and draw up a product-mix strategy to cater to the shifting patterns of consumer requirements. Excerpts from an interview:
The year 2007-08 seems to have been a great one for SAIL. Can you tell us a little more about the companys strong performance and the reasons for the same?
SAIL achieved new landmarks in 2007-08, with its best-ever production at 15 million tonnes, 14 MT and 13 MT respectively of hot metal, crude steel and saleable steel. The year also marked its best-ever capacity utilisation at 118 per cent, together with all-round improvements in operational efficiencies.
Several strategic management initiatives were undertaken to help foster a new culture in innovative practices. During 2007-08, the company recorded its best-ever profit-after-tax of Rs.7,537 crore, higher [than the previous years] by 22 per cent.
Such improvement in financial performance was achieved through higher production and sales, enriched product mix, higher value-added steel, better TE [techno economic] parameters, cost-reduction measures and prudent cash management apart from increase in net sales realisations.
SAIL is celebrating its 50th year of production through special programmes spread over the year. Could you tell us more about the celebrations?
The golden jubilee celebrations began at Vigyan Bhavan, New Delhi, on February 4 with the release of the newly designed SAIL logo and a commemorative book archiving the milestones of the companys journey by Union Minister for Steel Ram Vilas Paswan. The celebration marked the 50th year of hot metal production at the Rourkela Steel Plant on February 3, 1959, and at the Bhilai Steel Plant the following day. These two blast furnaces were dedicated to the nation by Indias first President, Rajendra Prasad.
The year-long celebrations will refresh memories of the successful journey of the organisation over the past five decades. During this period the dedication of each and every individual in SAIL made it into a great organisation that we are all proud of.
In its 50th year of production, SAIL is reaffirming its commitment to serve the nation with renewed vigour. A number of events have been planned to make the public aware of the significant contribution that SAIL has made to the national economy, the steel industry and society in general.
What are SAILs future plans, including mergers and acquisitions?
SAIL is implementing a massive expansion and modernisation plan in all its plants simultaneously. The aim is to deliver higher volumes of much-needed, value-added quality steels for infrastructure creation and also to maintain its dominance in the domestic market. The expansion plan will enable SAIL to incorporate state-of-the-art technology and draw up a product-mix strategy to cater to the shifting patterns of consumer requirements.
The capacity for hot metal production will increase to 26 MT in the next three years and possibly to over 60 MT by 2020. In the next few years, SAILs plants will improve their technology to help in cost reduction. Mergers and acquisitions are also in progress; already IISCO has been merged with SAIL. The merger of Bharat Refractories Limited (BRL) with SAIL was approved in April and further proceedings are on. The mergers of MEL [Maharashtra Elektrosmelt Limited], NINL [Neelachal Ispat Nigam Ltd] and NISCO [National Iron and Steel Company] are also on. A number of joint venture companies have been formed or are being formed as a strategic initiative in the areas of slag-cement, ferro-alloy production, coking coal production, and so on.
What is the amount of investment committed to in-house R&D at SAIL?
SAIL has a well-established in-house centre for this the Research & Development Centre for Iron & Steel (RDCIS) in Ranchi with more than 300 research engineers and over 350 pieces of advanced diagnostic equipment encompassing six pilot facilities under 15 major laboratories.
The centre has been continuously engaged in improving process parameters through technical interventions, energy conservation, upgradation of existing technology, development of new products, and so on.
The RDCIS has developed a number of value-added products and has commercialised them for critical applications, especially for sectors such as the railways, defence, power and in construction. SAIL spends around Rs.100 crore annually on R&D.
In times of increasing fuel and carbon costs, what steps are being taken to increase resource efficiency at SAIL?
Several steps have been taken to reduce energy consumption in various plants and also to increase usage of alternate fuels such as tar, usage of coal dust injection (CDI) technology and oxygen enrichment in blast furnaces, and higher usage of sinter. Already, we are having coal dust injection system in six of our blast furnaces and will be introducing the same in the others.
Every year energy consumption has been brought down by 2-3 per cent to reduce consumption of fuel, including coking coal. Other thrust areas include achieving higher yields, improving TE and productivity parameters, and improving the quality of iron ore through a beneficiation process. Apart from process improvements, SAIL also has plans to adopt energy-efficient technologies, phase out high energy-consuming processes, and ensure 100 per cent steel production through basic oxygen furnace-continuous casting route.
What role does SAIL play in setting steel prices in the country? Does the recent steel pricing issue underscore the importance of an entity like SAIL?
The demand-supply situation, along with cost of inputs, determines the prices of steel products worldwide. We are concerned about the recent rise in steel prices and have been taking steps to keep prices at a reasonable level so as to provide steel to the end-user at reasonable cost. In the first quarter of the current financial year, we have increased the supply of steel in the domestic market by 10 per cent and reduced exports by 68 per cent.
The major Indian steel producers brought down the prices in May and promised to hold them for three months that is, until July in spite of sharp increases in the cost of inputs such as coking coal, iron ore, and ferro alloys. The best insulation against high prices would be to create adequate capacity for steel production on a long-term basis. At SAIL, the capacity of crude steel production is being stepped up and is likely to cross 24 MT by 2011.
Does SAIL have an active CSR programme? Could you provide us details of any specific projects?
SAILs philosophy and credo is to make a meaningful difference in peoples lives. Right from its inception, it has contributed towards corporate social responsibility [CSR].
Its efforts have turned obscure villages, where SAIL plants are located, into large industrial centres. SAIL has established 40 primary health centres, 11 reproductive and child health centres, 31 hospitals and eight superspeciality hospitals to provide specialised health care to over 22 million people.
It has opened 138 schools in the steel townships to provide education to over 80,000 children. These efforts have brought down infant mortality rates and improved literacy rates in the steel townships to a level that is better than the national average. SAIL also works in areas related to the provision of safe drinking water, construction of roads, and the development of art, culture and sports.
Some of the recent efforts in corporate social responsibility:
Seventy-nine villages in eight States have been adopted as model steel villages for development of medical facilities, education, roads, sanitation and community centres.
For the first time, six free schools have been set up for underprivileged children, providing them midday meals, school uniforms and textbooks.
Five medical health centres have been set up in steel townships; they provide free medical consultation and medicines for the needy population;
Over 400 medical camps have been held during the year by steel plants/units in 12 States, which have provided free health check-up and treatment to over five lakh people.
SAILs contribution towards CSR has been recognised at the national level. It received the FICCI Annual Award 2006-07 for Outstanding Achievement in the category of Rural & Community Development Initiatives and the Business World-FICCI-SEDF Corporate Social Responsibility Award for 2006.