There can be little debateabout the fact that thewhole world is looking atIndia, after China, as thesteel market with the

most action. With a current crudesteel production of around 57 mil-lion tons (mt) and steel makingcapacity poised to reach 100 mtby 2010-13, it is evident that cok-ing coal and coke demand will seea big jump. The scenario is robusteven at the demand side of themarket.

India's steel consumptionrose 8 percent in the year endedMarch 2010, to 56.3 MT, from52.3 MT in the previous year, aper the Ministry of steel.Expectations are even brighter.

At a juncture like this, withmassive expansion plans laiddown by the steel majors like steelAuthority of India, TATA Steel andJSW among others, a major con-cern for the industry lies in theavailability of coke and cokingcoal.

Coke, a derivative of cokingcoal, plays a very significant rise inmetallurgical process. Worldwide,the main demand for coke comesfrom the steel and steel intermedi-ary industry which uses low ashmetallurgical grade coke as theprimary reducing agent for iron inthe blast furnace route.

Although India is wellendowed in terms of some crucialraw materials like iron ore, but inthe coking coal segment, the

country relies primarily onimports. India imports coking coalto manufacture coke, in a segmentdominated globally by China,which, besides being the largestproducer, is also the biggest con-sumer and exporter.

Notwithstanding the sloweconomic growth in 2008 and2009, it is expected that globaldemand for metallurgical coal willgrow by 6 percent per annum inthe coming years, driven by rapidgrowth in integrated steel makingcapacity in emerging markets -notably China and India. The fiveyear trend growth forecast forglobal metallurgical coal con-sumption is 5/7 percent perannum.

The present situation is criti-cal with China almost stoppingexport of cocking coaland coke. From hereon therefore, theavailability situationcan only worsen. Indiahas severe shortageof premium qualityhard coking coal forsteel making, which isbeing primarily metthrough imports.Withsteel productioncapacity increasing,the situation will getmore critical. WithChina also keepingtheir coking coal for themselves,the shortage will deepen furtherfor domestic merchant coke pro-

ducers.In fact, there is an acute

shortage of good quality cokingcoal globally, China has become anet importer of coking coal fromlast year, making matters worse.China imported 35 mt of cokingcoal last year and with steel pro-duction around the world increas-ing, the industry is starting at aglobal shortage of coking coal inthe near future.

Mr. Ganesan Natarajan, ChiefExecutive Officer, Whole TimeDirector and President of EnnoreCoke Ltd. said that coke makingcapacities have moved up withincreasing need. However, theproduction figures are yet to pickup similar pace.

It also to be kept in mindthat in most plants expansions arecoming up mostly in the blast fur-nace route. Even CorexTechnology requires coke and theferro alloy industry is also doingwell.

Thus, even with a very con-servative crude steel production

rise in the next five years, thedemand supply gap promises to

be significantly large.INDIAN SCE-

NARIOAt present, India

produces around 20-22 mt of met coke andthe rest is metthrough imports.Production is under-taken by merchantcoke makers as wellas the integrated steelplants. In India, majorcoke production has

traditionally been captive, as cokeis being produced in the cokeoven batteries of integrated steelplants as well as Pig iron plants.All major integrated steel plantshave recovery type captive cokeoven batteries.

Though merchant cookerieshave a capacity of 7.6 mt, produc-tion has never touched more than2.5 mt at any given point of time,pointed out Natarajan.

The country produced around20.5 mt of coke in 2009-10 and of this, the shareof merchant coke mak-ers was 2 mt, which islower than the previousyear. Although the pro-duction capcities under-went some increase,but the productionremained the same.

Taking of capacityutilization, it is to benoted that the currentproduction by theIndian merchant cokemakers is low - at

around 60 percent. This is primari-ly owing to the type or the size ofthe individual plant. Natarajanpointed out that many units havea capacity of only 3000 tons permonth. They run on a standalonebasis and it is impossible for themto bring a ship load of raw mate-rials for 10 months.

THE SUPPORT OFIMPORTS

In the given situation, there isno option for India but to fall backon imports. India gets its cokingcoal from Australia, the US andnow imports from Russia area are

also coming in plenty. Natarajanfeels that the trend of importingfrom Russia is likely to remain."There are only two grades ofcoal which are available. One islow volatile and the other is highvolatile. The Russian coking coal issecond grade. Thus, to make steelproduction cost effective, Indiansteel makers are blending thesetwo grades of coal. So we wouldbe seeing a lot of Russian cokingcoal coming into the market",

Natarajan explained.Meanwhile, the integrated

steel plants mostly have their owncaptive sources and thus importvery little. India generally sees atotal import of around 24 mt ofcoking coal, mostly by secondarysteel producers. Out of this, onlyaround 6 to 7 mt is imported bythe integrated plants, accountingfor 25 to 30 percent of the totalimports, he explained. Indianimports are expected to reach 30mt this year.

CHINA - THE GLOBALRULER

Speaking of imports, it has tobe noted that China, a predomi-nant player in this segment, hasstopped exporting now. Chinaaccounts for about 60 percent ofworld steel production and henceautomatically the largest con-sumer of coking coal and coke.China influences the demand sup-ply dynamics and pricing of cok-ing coal and met coke to a greatextent.

China has been undertakingconsolidation of cocking coalmines and has closed many usefulmines. Consequently, the total

Chinese production ofcoking coal has notincreased in line withits steel production.As a result China hasbecome a netimporter of cokingcoal to care of itsdomestic needs. Lastyear China imported35 mt of coking coaland this year it isexpected to touch 45

MT. China had been 3exportingcoking coal till 2003, and thetrend reversed in 2004.

China produced 345 mt ofcoke in 2009. Historically Chinahas been a major exporter ofcoke. But, Chines4e export of metcoke dropped dramatically sincemiddle of 2008 due to impositionof 40 percent export tax on coke.Consequently, Chinese met cokeexports dropped to just 0.5 mt in2009.

Thus, this would have a directimpact on the Indian market.Natarajan explained that on onehand China has stopped exportingand on the other, China is alsobuying coke as the Chinese areclosing the coke plants owing toenvironmental issues and by2011 will also have to close cer-tain coking coal mines.

GLOBAL SCENEGlobally, the scenario in the

met coke industry is even worsethan that of coking coal. With nonew source of coking coal in sightto meet the growing demand,coking coal will remain in tightsupply in the years to come and sowould be met coke.

Moreover, the 40 percentexport tax on met coke levied byChina since August 2008 and per-manent closure of 11 mt petannum coke capacity in EasternEurope have created a large vacu-um in coke markets globally. Thecoke making process is seeing aglobal shift from Europe to Asiancountries. China used to com-mand 50 percent of world exporttill 2008,w hich ahs dropped dras-tically.

The pinch was not felt to thatextent due to the downturn in thelast two years. But, once cokedemand return to pre crisis levelsof 30 MT, it is difficult to say howthis huge gap is going to be filled,with no signs of China reversing itpolicy on export tax.

THE PRICE CURVE - THECONTRACT PRICING

Being a crucial raw materialfor steel making and with hugeavailability crunch, the price ofcoking coal has always been arocky story. The price of cokingcoal and met coke has almostdoubled in the last 12 months andis continuously increasing with nosign of abating. Coking coal pric-ing contracts are now being fixedon a quarterly basis. Thefirst quarter price for 2010-11 wassettled at$ 200 per ton, whichwent up to $ 225 per ton for thesecond quarter and has settled at$ 209 per ton for the OctoberQuarter.

"Spot price was trading at $200 per ton and below during thelast quarter which was lower thanthe contracted rate of $ 225 perton. Hence the contracted price of$ 209 per ton is actually anincrease in price over the prevail-ing spot prices and indicates astrong future".

"This also indicates that cok-ing coal price would not be goingdown any further in near futureand any trend of falling price isbeing arrested. Though the pre-sent quarterly price is a 7 percentdrop from the contracted price oflast quarter, but in actual terms itis an increase in price over theprice of the previous quarter. Thishas been supported by the steadyincrease of spot coking coal priceover the last two to three weeks".

Price of met coke has nearlydoubled from around $ 300 perton (fob China) to over $ 550 perton (fob China). Price of met cokefollows the same trend of cokingcoal but the rise is generallysteeper.

THE WAY FORWARDWith a host of steel compa-

nies lining up major investmentproposals, the Indian steel indus-try is likely to receive huge domes-tic and foreign investments, andthe demand of coking coal andcoke will grow exponentially.

Although the Indian cokeindustry is planning capacity addi-tions and some projects areexpected to come on stream inthe near future, the additions arenot very large and India is expected to remain dependent onimport of coke as well as cokingcoal.

Natarajan said the demand-supply gap is slated to widen.Overall, India may be looking at amet coke shortage as early as in2011 and beyond, unless the fac-tors causing it do not changeovernight, which is most unlikelyto happen. India being totallyintegrated with the globaldemand supply dynamics wouldface similar shortages as otherparts of the world.

The Indian Telecom Sector hasbeen growing in leaps andbounds.At the same time thecompetition has risen to a

fierce level due to intensive pricewars. It has become inevitable forincumbent and entrant to adoptstrategies to maintain profit mar-gins and survive in business.

The Indian market is gettingexposed to new technologies like3G and there are lot of opportuni-ties to be explored. The Indian cel-lular market is majorly voice centricwith 60% revenues coming fromrural regions. So the next wave ofgrowth will be in the rural market.The level of adoption of mobile ser-vices is need driven. It is dependentupon factors like affordability,awareness and related social fac-tors. Mobile applications is forecastto be an important profit driver innear future, as indicated throughkey research conclusions ofGartner.

According to Gartner research,worldwide revenue from mobileapplications will total $6.8 billionin 2010, an increase of 60% overthe $4.2 billion spent in 2009.Gartner predicts that in 2013, 21.6billion applications will be down-

loaded, generating nearly $30 bil-lion in revenue - more than fourfoldincrease over 2010. Games, mobileshopping, social networking, utili-ties and productivity tools will con-tinue to grow and will be the mostpopular applications among thecustomers.

The Indian market trends indata segment is in synch with glob-al trends. The data market was tab-ulated around 5-10 mn during early2009. Today the number of datausers has increased to 25 mn. Themobile applications are beingdesigned in a manner to focus on 3specific areas: Entertainment,Information and Voice. Howeverthe level of penetration of data isnegligible in rural India. Reasonbeing unawareness, preference tovoice services over data services asdata services are perceived to beexpensive. The Indian subcontinentis quite varied in nature with localdialect changing every 10 Kms. Thiscreates difficulty in communicatingwith customer. Even the variety inlocalised services cannot be solu-tion each time. The drive to gainaccess to rural retailers is, in someways, as critical as the one to reachconsumers. If we look at rural retailin India, the outlet size is verysmall. Merchants will often stockjust one brand in a category; theydo not have the resources to stockmultiple brands. They will stock thebrand that sells the most. With lim-itations, the telecom serviceproviders are trying to bring revolu-tion by designing and deployingkiller applications which will be

customer centric and can augmentthe profit margins.

If we talk about mobile appli-cations -it is mobile barcode appli-cation, which demands attention.Mobile Ticketing, getting BoardingTickets on mobile, and mobile pay-ment using barcode are some of itsapplications. We can book ticketsonline and get them inform of bar-codes which is scanned and it giveseasy entrance to the movie hall.Similarly one can get airline board-ing ticket as barcode instead ofhard copy and directly proceed forsecurity check. However theseapplications are yet to capture themarket in India. Banking is apromising sector for VAS develop-ers who can develop applicationsfeaturing banking transactions.One can get his credit/debit carddetails enclosed within a barcodewhich in turn can be a substitute toactual cards. The secured barcodebearing account details can bescanned and further transactionscan be made. Such application willguarantee an easy shopping expe-rience to the customer.

Several rural regions aroundthe world, especially in under-developed areas, do not haveaccess to basic healthcare servicesand much of the burden of health-care delivery falls on local healthworkers who have limited skillsand expertise. In such scenario cellphones are being used as a poten-tial tool for improving rural health-care. The open-source movement inmobile software has openedopportunities for developing new

mobile healthcare applications. Cellphones are increasingly used ascommon clients for a wide suite ofdistributed, database-centrichealthcare applications in develop-ing regions. This is particularly truefor rural developing regions wherethe bulk of the healthcare is han-dled by health workers due to lackof doctors. Unfortunately, the cur-rent distributed system is far tooheavy-weight for mobile applica-tions, particularly in light of thehigh communications cost. So,innovative solutions can be intro-duced catering to the needs of thehealth sector. One of the innovativemobile applications can be"Efficient Lightweight MobileRecords "(ELMR) system.

This is one product which hasbeen implemented in African coun-tries; it meets the urgent demandsof health sector in the rural areas.The Indian health sector can bebenefited by similar innovative andcost effective mobile applications.

Mobile technology finds itsapplication in education as well.Mobile phone vocational training isone of the applications which isbeing provided as part of valueadded service by operators likeAirtel. It becomes an effectivemedium of mobile learning for peo-ple in rural areas. Most of theseapplications are SMS based whichare convenient and economical.

A popular SMS application inthe market is short code. Users SMSto the short code -the code of theapplication, to access real timeinformation like train reservation,

airline schedules or company datasheets. Media houses have suc-cessfully implemented the shortcode to feed news to subscribers.

The Enterprise segment hasalso gained immense attention ofVAS developers and operators inrecent times. Today, Enterprisesacross the verticals are embracingthe idea of adopting diverse mobileapplications that offer tangiblebenefits like cost savings, makingmobile applications an integralpart of their communications strat-egy. The services could be real timeallocation of tasks to field serviceengineers with respect to theirphysical location; Application initi-ated calls for debt recovery/billpayment; Click to call features forEnterprise web sites; Targeted dis-tribution of information to enter-prise workers, etc. Millions ofinvestments have been made inbuilding Enterprise VAS by firmslike Mobien Technologies, mGlitz,Mobiquest and many more.Mobiquest, an enterprise platformcompany, has developed an enter-prise VAS solution-MobiForms,which can help one completeaudits, surveys, questionnaires on asimple common mobile phonedevice.

The insurance companies haveexpressed concerns towards reduc-tion in processing time by empow-ering evaluators with MMS-enabled phones, so that they cansend snapshot of the documents toprocessing centre. The claimamount can be calculated andreferred to the field guy. The only

issue involved is that networksshould be ready to support MMS.

Operator's BenefitBy the end of 2010, the 3G

services will be rolled out in thecountry. However 3G demand willbe dictated by affordability, adop-tion level of 3G services and pene-tration of 3G handsets across thecountry. The rural handset figurehas reached 100 mn mark and thisis where next wave of growth is setto take place. However the ruralhandset market is mostly driven bycheap Chinese handsets and local-ly manufactured handsets whichare not compatible with manymobile applications. As a result thecustomer gets discouraged toexperience new services. Even arural customer looks for rich con-tent which fulfils basic require-ments like live radio or basic valueadded services. Secondly the PCpenetration is less and rural folksfind it complicated to operate acomputer. This limits Broadbandpenetration as well. Consideringthe Indian demography, it isexpected that affordable, userfriendly mobile applications candrive data revenues. It is clear thatoperators have larger scope toexplore in B2C segment.

The mobile applications mayinvolve higher initial capex but theyhave potential for improved cus-tomer retention and this wouldbenefit operators to reduce opexfor enterprises. Enterprise applica-tions will help operators boost rev-enues by offering higher value ser-vices and they need to demon-

strate the service to enter-prise customers. Theenterprise customersshould feel confidentabout the productwhich can reducecosts, improveeffect ivenessand efficiencyand increasesales. This isthe great-est prospectfor operators.

Challenges The present growth is note-

worthy, but there are areas thathave kept mobile apps from gain-ing widespread adoption in thebusiness world.

ROI and Security are the obvi-ous questions management wouldask a CIO trying to implemententerprise mobile applications.Adopting any mobile application isan expense, with no assurance ofdirect returns. For instance, cus-tomers may use a bank's shortcode toll free but the bank has topay the application providers andthe operators.

Of course, returns are in theshape of better customer focus. Ifcustomers get better service theyremain loyal and bring in morebusiness. Mobile applicationbecomes a great tool in acquiringnew customers and retaining oldones. In the Business to Business(B2B) space employees have flexi-bility at their disposal which makesdelivery of business easier andreduces the turnaround time.

Security isan obvious

reason of con-cern. It is easy to

extract confiden-tial information

once data leaves thecompany server and

rides on public network.Issues like handsets get-

ting misplaced or someoneelse using the handset puts

the company's business atrisk. In a Business to Customer

(B2C) scenario, a customer mightnot like others snooping around

his data. So, companies likeVeriSign have been supportingapplication developers and net-work operators to give secure envi-ronment for users especially wherefinancial data is being exchanged.So it becomes vital for enterprisesto feel confident before using themobile applications and deploysecured environment for their cus-tomers.

The need to access day-to-dayapplications from remote locationsor from mobile devices, the need tocollaborate and share files with coworkers across the globe, the grow-ing demand to have better produc-tivity tools remotely, and lastly thegeneral growth in mobile andremote workers drive the need forremote/mobile applications acrossbusinesses and industries. Withrealization of its true potential theenterprises and the operators havebeen inspired to deploy contentrich mobile applications. Certainlyit will be a win-win situation for all.

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"Eastern India will be the Pioneer forIndigenous Coke Industry"

Mobile applications beyond communication

Ganesan NatarajanWhole Time Director, President & CEO, Ennore Coke Limited

Manisha Panda