01RKulshreshtha_29Sep2012

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SAIL- Strategy 2020

Indian Institute of

Metals

Delhi Chapter

Rakesh KulshreshthaExecutive Director I/C

[Corporate Planning]

Resurgent India Vision 2020 in Metals & Minerals Sector


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JOINT VENTURESJOINT VENTURES

/ STRATEGIC ALLIANCES/ STRATEGIC ALLIANCES

CONTENT OF THE PRESENTATIONCONTENT OF THE PRESENTATION

OUR VISION FOROUR VISION FORTHE FUTURETHE FUTURE

SAILSAIL A BRIEF DESCRIPTIONA BRIEF DESCRIPTION

CORECORE

STRATEGYSTRATEGY

& EXPANSION& EXPANSION


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INTRODUCTIONINTRODUCTION

ABOUT SAILABOUT SAIL

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SAILSAIL -- LARGEST STEEL PRODUCER INLARGEST STEEL PRODUCER ININDIAINDIA

Identified modernisation and expansion plan expanding capacity to 20.23MTPA of saleable steel

FY2012 saleable steel production of 12.40 MT

4

y .

Second largest iron ore mining operationsin India

One of only five PSEs in India accordedMaharatna status

FY2012 turnover of over Rs. 50,000 crores


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......WITHWITH ANAN ESTABLISHEDESTABLISHED ANDAND SUCCESSFULSUCCESSFUL

OPERATINGOPERATING TRACKTRACK RECORDRECORD......Over 50 years of experience in the steel sector

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Total Current Saleable Steel Capacity 11.20 MTPA

FY12 Saleable Steel Production 12.40 MT

Total Saleable Steel Capacity PostExpansion

20.23 MTPA

Manufacturing Facilities

PlantCurrentcapacity(MTPA)

FY12Production

(MT)

PlannedInstalledCapacity

(MT)*

Integrated Steel Plants

Bhilai Steel Plant 3.15 4.24 6.56

Durgapur Steel Plant 1.59 1.84 2.12

......ANDAND STRATEGICALLYSTRATEGICALLY LOCATEDLOCATED OPERATIONSOPERATIONS

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. . .

Bokaro Steel Plant 3.78 3.35 4.18

IISCO Steel Plant 0.55 0.32 2.39

Special Steel Plants

Salem Steel Plant 0.18 0.31 0.34

Alloy Steels Plant 0.18 0.19 0.43Visvesvaraya Iron &Steel Plant

0.1 0.06 0.22

Total 11.2 12.38 20.23

Note: Capacity numbers refer to saleable steel capacity

* After implementation of Modernisation & Expansion Plan


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FULLYFULLY INTEGRATEDINTEGRATED PRODUCERPRODUCER WITHWITH

STRATEGICALLYSTRATEGICALLY LOCATEDLOCATED OPERATIONSOPERATIONS......

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Five integrated steel plants and three specialsteel plants located principally in eastern and

southern India

Easy and cost efficient access to raw

materials

Ready supply of substantial portion of raw

materials


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Second largest mining operations in India in FY10

99.9% 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 throughcaptive soruces

Developing new coking coal mines at Tasra and Sitanala

Access to largecaptive raw

material base

Sizeable land bank provides flexibility for expansion and growth at existinglocationsLarge land bank

......ANDAND ACCESSACCESS TOTO LARGELARGE RESOURCERESOURCE BASEBASE

8

Owns and operates four captive power plants (aggregate cap. of 211MW)

50% interest in four captive power plants (aggregate cap. of 1,116 MW)

Approximately 70% of FY12 power requirement sourced through captivesources

Relative self-sufficiency in

power

106,000 full-time employees including over 15,000 executives

Reducing employee cost/tonne expanded capacity planned to beoperated with the current number of employees

Emphasis on skill based training to remain competitive

Large skilledmanpower

base


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DIVERSIFIED PRODUCT MIX SUPPORTED BYDIVERSIFIED PRODUCT MIX SUPPORTED BY

STRONG DISTRIBUTION AND SALES NETWORKSTRONG DISTRIBUTION AND SALES NETWORK

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Rods / bars16.7%

Coated products2.0%

CR coils / sheets6.7%

Structurals7.1%

Railwaymaterials

7.3%

HR coils / sheets

28.2%

Plates20.6%

Pipes0.5%

Semis10.9%

Sales Breakup by Products


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VisionTo be a respected world-class corporation and the leaderin Indian steel business in quality, productivity,

profitability and customer satisfaction

Credo

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We build lasting relationships with customers based on trust andmutual 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 meaningfuldifference in people's lives.


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SAILs LONGSAILs LONG

TERMTERMSTRATEGY FORSTRATEGY FOR

GROWTHGROWTH

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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 nearthe 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.


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SAILs CoreBusiness -

Steel

SAILs CoreBusiness -

Steel

SupportingBusinesses

Raw-material andresources supply

businesses

Upstream

Supporting Businesses

End Use

Industries

Business

Diversification inrelated

businesses

Diversification inrelated

businesses

Other Related BusinessesEngineering Workshops

Prefabricated structures in steel

Brand exploitation in related businesses

Manufacturing of equipment & machinery

Power generation & transmission (incl. Renewable Energy]

Railway track expansion & up gradation projects

Metro rail / light rail urban transportation projects

Logistics solutions

Production of rolling stock (wagons, coaches etc)

Waste Management


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MODERNISATIONMODERNISATION

EXPANSIONEXPANSION

PLANPLAN

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Capacity build-up as per current expansion plan envisages :

MODERNISATION & EXPANSION PLANMODERNISATION & EXPANSION PLAN

Particulars Installed

Capacity

After Current

Phase

(Million tonnes)

. .

Crude Steel 12.84 21.40

Saleable

Steel

11.07 20.23


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MODERNISATION & EXPANSION PLAN:

SALEM

Installed cap. After Expn

Crude Steel - 0.18

Saleable Steel 0.18 0.34

Production Build-upmillion tonnes

Major FacilitiesMajor Facilities

New Steel Melting Shop (180,000New Steel Melting Shop (180,000 tpatpa))

New Cold Rolling Mill Complex (146,000New Cold Rolling Mill Complex (146,000 tpatpa)) UpUp--gradation of Existing Cold Rolling Millgradation of Existing Cold Rolling Mill Roll grinder for Hot Rolling MillRoll grinder for Hot Rolling Mill


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MODERNISATION & EXPANSION PLAN:ERNISATION & EXPANSION PLAN:

IISCOIISCO

Installed cap.Installed cap. After Expn

Hot MetalHot Metal 0.850.85 2.912.91

Crude SteelCrude Steel 0.500.50 2.502.50

Saleable SteelSaleable Steel 0.400.40 2.392.39

Production BuildProduction Build--upup million tonnes

MajorMajor FacilitiesFacilities

CokeCoke OvenOven BatteryBattery ((00..7878 millionmillion tonnestonnes),), SinterSinter PlantPlant ((33..88 millionmilliontonnestonnes))

BlastBlast FurnaceFurnace ((40604060 mm33)) withwith TopTop PrPr.. RecoveryRecovery TurbineTurbine ((22..77 millionmillion

tonnestonnes)) BasicBasic OxygenOxygen FurnaceFurnace (BOF)(BOF) ShopShop ((22..5656 millionmillion tonnestonnes)) BilletBillet CasterCaster ((11..6767 millionmillion tonnestonnes)) andand BeamBeam Blank/Blank/ BloomBloom CasterCaster ((00..88

millionmillion tonnestonnes))

HeavyHeavy SectionSection MillMill ((00..66 millionmillion tonnestonnes),), WireWire RodRod && BarBar MillMill ((11..2525millionmillion tonnestonnes))


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MODERNISATION & EXPANSION PLAN :

BHILAI

Installed cap.Installed cap. After Expn




.. ..


Coke Oven BatteryCoke Oven Battery--11 (7 m tall); 211 (7 m tall); 2ndnd Sinter M/c in SPSinter M/c in SP--33

Blast Furnace (4060 mBlast Furnace (4060 m33

)) Steel Melting ShopSteel Melting Shop III (4.0 millionIII (4.0 million tonnestonnes)) New CastersNew Casters Bar & Rod Mill (0.9Bar & Rod Mill (0.9 mtmt), Universal Rail Rolling Mill (1.2 million), Universal Rail Rolling Mill (1.2 million

tonnestonnes))


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ROURKELA

Installed cap.Installed cap. After Expn (Mt)Hot MetalHot Metal 2.002.00 4.504.50





7m tall Coke Oven Battery, Sinter Plant (1x360 m2)7m tall Coke Oven Battery, Sinter Plant (1x360 m2) Blast Furnace (4060 mBlast Furnace (4060 m33), 3), 3rdrd BOF, LF, RHBOF, LF, RH--OBOB Single strand slab casterSingle strand slab caster

New plate mill 4.3m (1.0 millionNew plate mill 4.3m (1.0 million tonnestonnes))


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BOKARO

Installed cap.Installed cap. After Expn (Ph-I)



Production BuildProduction Build--upupmillion tonnes



Rebuilding of COBs with Pollution Control measuresRebuilding of COBs with Pollution Control measures

UpgradationUpgradation of one Blast Furnaceof one Blast Furnace UpgradationUpgradation of existing SMSof existing SMS--II to 3.35 millionII to 3.35 million tonnestonnes from 2.85from 2.85

millionmillion tonnestonnes

New Cold Rolling Mill Complex (1.2 millionNew Cold Rolling Mill Complex (1.2 million tonnestonnes))


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DURGAPUR

Installed cap.Installed cap. After Expn (Ph-I)



ru e teeru e tee .. ..



RMHS & Coal handling facilities; UpRMHS & Coal handling facilities; Up--gradation of By Product Plant,gradation of By Product Plant,Dolomite plant, LF New slag yardDolomite plant, LF New slag yard

Rebuilding of Coke Oven BatteryRebuilding of Coke Oven Battery--22 BloomBloom--cum round caster (0.75 millioncum round caster (0.75 million tonnestonnes))

Medium Structural Mill (1.0 millionMedium Structural Mill (1.0 million tonnestonnes))


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SAIL BROWN FIELD EXPANSION TO

REACH ITS ULTIMATE CAPACITY

TheThe brownbrown--fieldfield expansionexpansion potentialpotential ofof thethe integratedintegrated steelsteel plantsplants hashas

beenbeen assessedassessed basedbased onon:: ExistingExisting facilitiesfacilities

ac esac es un erun er ngo ngngo ng o ern za on xpans ono ern za on xpans on anan-- asease--

FacilitiesFacilities thatthat couldcould comecome underunder OngoingOngoingModernization/ExpansionModernization/Expansion PlanPlan--PhasePhase--IIII

CapacityCapacity ExpansionExpansion PlanPlan basedbased onon exploitingexploiting fullfull brownbrown--fieldfieldcapacitycapacity ofof integratedintegrated steelsteel plantsplants atat theirtheir existingexisting locationslocations

Realization in a phased manner


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JOINTJOINT

STRATEGICSTRATEGIC

ALLIANCESALLIANCES

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CURRENT JOINT VENTURES / STRATEGICCURRENT JOINT VENTURES / STRATEGIC

ALLIANCESALLIANCESFOCUS AREA ALLIANCE PARTNER OBJECTIVE

POWER

JVs with NTPC and DVC for power plants for captiveconsumption

Bokaro Jaypee Cement Ltd is operating a 2.1MTPA

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CEMENT

Bhilai Jaypee Cement Ltd is operating a 2.2MTPAcement plant at Bhilai

SHIPPING

JV with Shipping Corporation of India for shipping ofimported 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


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CURRENT JOINT VENTURES / STRATEGICCURRENT JOINT VENTURES / STRATEGIC

ALLIANCESALLIANCES

FOCUS AREA ALLIANCE PARTNER OBJECTIVE

TECHNOLOGICAL

UPGRADATION

MoU with Kobe Steel to explore employment ofITmk3 single step furnace technology.

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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 silico-

manganese to lower cost of steel production

MoU with NMDC to jointly develop limestone minein Himachal Pradesh with expected capacity of3MTPA

S&T Mining JV with Tata Steel for acquisition anddevelopment of coal blocks/mines


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Blast furnace is the most acceptable iron making

technology for mass production; offers economies of scale.

Drawbacks: Ener intensive

EMERGING ALTERNATIVE IRON MAKINGEMERGING ALTERNATIVE IRON MAKING

TECHNOLOGIESTECHNOLOGIES

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


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Iron ore:

1. The future steel plants to use more quantities of beneficiated ironore

2. Use of pellets and micro fines in sintering to increase

Cokin Coal:

SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

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 inthe coke oven blend through use of technologies like Stampcharged batteries, etc.

Introduction of alternate iron making technologies which canuse non coking coal and iron ore fines.


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TECHNOLOGIES TO REDUCE WATER &TECHNOLOGIES TO REDUCE WATER &

SPECIFIC ENERGY CONSUMPTIONSPECIFIC ENERGY CONSUMPTION

Future steel plants would target zero discharge of water

through extensive closed circuit cooling and through extensivedry cooling.

op on o ec no og es w c e m na e processes e

sintering and coke making (thus reducing heating and coolingcycles) would also contribute towards reducing CO2 emissionsand water consumption.


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SAIL and Kobe Steel, Japan to jointly set up a 0.5 millionTonnes per annum ITmk3 technology based iron nugget plant

at SAILs Alloy Steel Plant, Durgapur.

Latest technology developed by Kobe Steel, Japan, to produceremium rade Iron nu ets usin low rade Iron Ore Fines

JV WITH KOBE STEEL FOR ITMK3JV WITH KOBE STEEL FOR ITMK3

TECHNOLOGYTECHNOLOGY

and non-Coking Coal.

One of the largest technologieswhere downstream facilities will

become energy efficient.

Running successfully in MinnesotaPlant


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ITMK3 PROCESS: PRODUCTION OF IRONITMK3 PROCESS: PRODUCTION OF IRON

NUGGETSNUGGETSDisadvantage 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

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IRON NUGGETSIRON NUGGETS

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HAJIGAK DEPOSITSHAJIGAK DEPOSITS


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BACKGROUNDBACKGROUND -- HAJIGAKHAJIGAK

The Hajigak Iron Ore Deposit issituated in the mountainousBamyan 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 1.8bn. Tonnes of high grade Magnetite

ore (62-64% Fe). Presence of coking coal & other

raw material source makes itexceptionally favourable targetfor economic development.


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HAJIGAK BIDDINGHAJIGAK BIDDING

Submission of bid by Afghan Iron and Steel Company(AFISCO), a consortium of seven leading Indian steeland mining companies in India :

SAIL (Lead Consortium Member) RINL NMDC

JSW JSPL JSW Ispat Limited

Monnet Ispat and EnergySelected as Preferred Bidder for three blocks (B, C & D) ofthe Hajigak Iron ore deposits and Reserved Bidder for the block.


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Development of iron ore resource

HAJIGAK IRON ORE DEPOSITS,HAJIGAK IRON ORE DEPOSITS,

AFGHANISTANAFGHANISTAN SAIL led Consortium of seven (7) public and privatesector companies - Preferred party for the three outof four iron ore blocks of Hajigak deposits,

Afghanistan.

Value-addition by setting up a steelmanufacturing facility;

Power plant; Development of Rail & Road

infrastructure and CSR activities

Negotiations are ongoing with the Afghanistan

Government.


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SETTING UP OF A GREEN FIELDSETTING UP OF A GREEN FIELD

INTEGRATED STEEL PLANT IN SINDRIINTEGRATED STEEL PLANT IN SINDRI GoI allotted land and other assets of the closed unit of FCIL

at Sindri, Jharkhand to SAIL in August11 - 5482 acre land

available for the project. To incorporate 3 JVs for setting up a steel plant, Urea Plant

, .

SPV SAIL-Sindri Projects Ltd. incorporated in Nov.11

Firmed up proposal submitted to Ministry of Fertilizer.

Final Clearance from BIFR awaited for initiating furtheractivities.

Project related activities shall commence thereafter


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SAILSAIL--RITES JV PROJECTRITES JV PROJECT

SAIL RITES Bengal Wagon Industry Private Ltd.

with 50:50 shareholding.

The Wa on manufacturin lant to undertake

fabrication of 1500 wagons per annum.

The plant is being set up at SAIL Growth

Works, Kulti and construction work is in fullswing.


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OTHER RAILWAY PROJECTSOTHER RAILWAY PROJECTS

Setting up a wagon components (Cast steel Bogies, Couplersand related products) manufacturing facility as a 50:50 JV

with Indian Railways.

The plant to be set up on the land under possession of , .

JV Agreement signed between SAIL

& BSCL, a PSU under Ministry

of Railways.

Incorporation of JV under progress.


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INITIATIVES IN POWERINITIATIVES IN POWER

Augmentation of power

750 MW additional Power facility planned at Bhilai and Rourkela

through NSPCL

Renewable Sources of Power

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 (80MW).


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FOR THEFOR THEFUTUREFUTURE

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SAILS VISION FOR THE FUTURESAILS 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


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SAILS VISION FOR THE FUTURESAILS 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


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HANK Y

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