Indian Steel Alliance - Media Centre

The Steel Industry as a whole is functioning normally. The production of Integrated Steel Plants has increased by 10%. Steel prices have been reported to be statistic. From some Induction Furnace centres, it is noted that some new units have installed in Chhattisgarh, Jharkhand and Orissa.

The 48th meeting of Board of Governors of National Institute of Secondary Steel Technology (NISST) was held in the Steel Ministry on 23rd August 2006. Mr. R.P. Varshney is a member of the NISST Board and attended the meeting. The participants brought to the notice of Chairman, NISST Mr. Kumar Arvind Singh Deo that the date and timings of NISST meetings should not be changed because the participants come from outside Delhi also. The chairman agreed that in future this point will be taken care of.

The objection raised by some of the NISST Board members in regard to Director's appointment, in regard to the word "supersede Mr. J.S. Chawla" is mentioned. The amendments indicate that in the meeting no such word was used. It should be deleted. The Status Report on performance of NISST was considered. The members felt that the progress is OK. However, more efforts should be made to earn more revenue. The Director (Acting) felt that there is a shortage of staff at NISST. He was asked to prepare necessary case justifying for more staff.

The chairman was requested that necessary action be taken for appointment of a permanent director for NISST so that vacancy is filled up as early as possible. He was informed that for the last 4½ years, no Director has been appointed. It was also decided that Board of Governors meeting should be held at least once in three months. Chairman stated that as he took over the portfolio recently which took sometime for him to call the meeting. He promised that the next meeting will be held on early October 2006 to make up the long gap between 47th & 48th Board of Governors meeting.

Confederation of Indian Industry (CII) in association with the Ministry of Environment and Forest, Govt. of India and US Government organized Indo-US workshop on-"Business & Technology Cooperation opportunity for Industry in The Asia-Pacific Partnership on Clean Development and Climate"- on 26th August 2006 at New Delhi.

The objective of this workshop is to generate awareness on APPCD&C initiatives in India and seek participation of public and private sector in this six-countries USA, Japan, Australia, India, China and Republic of Korea partnership programme. The key focus of the partnership is on the development, deployment and transfer of existing and emerging clean technologies. The vision statement of partner countries envisages to work together, in accordance with the respective national circumstances to develop, deploy and transfer cleaner and efficient technologies and to meet national pollution reduction, energy security and climate change concerns, consistent with the principles of UN Frame work Convention on Climate Change (UNFCCC).

Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, Govt. of India inaugurated the programme. In his inaugural address he mentioned that APP is complementary to Kyoto Protocol. He clarified this partnership programme is voluntary and there is no mandatory statute. No financial assistance or subsidy available from respective governments. The partnership will help in disseminating knowledge on best practices in Clean Development and Climate followed by partners of developed countries. Mr. Montek Singh mentioned that technologically India is lagging far behind than U.S.A. The Asia Pacific Partnership will help in access to new technology.

Other speakers of the workshop were Dr. Prodipto Ghoosh, Secretary, Ministry of Environment and Forests, Govt. of India. Mr. James L Connaughton, Chairman, Council of Environmental Quality, the white House, U.S.A. and others. Mr. Connaughton mentioned that APP has opened up business opportunities for entrepreneurs in the partner countries. He suggested that countries involved in the programme should amend tax laws. To promote investments in equipments for improving energy efficiency, productivity, mitigating pollution, GHG emission and other equipments for Clean Development and Climate concerns, tax incentives should be granted. Inaugural session was followed by Interactive session which was chaired by Dr. Harlan Watson, US Senior Climate Negotiator and Special representative Chair of the policy implementation Committee. In the interactive session, representatives from MoEF, Renewable Energy Sector, Power, Steel, Cement etc. participated highlighting the extent of GHG and Co2 emission and other aspects of environment and climate change concerns of the respective sector.

A meeting was held on 23rd August 2006 at Regional Office of JPC, New Delhi in regard to Steel Production and Demand by various sectors. This meeting is as a follow-up action of the Interactive session of Secretary (Steel) with Chief Executives of Steel PSU and Steel Industry Association on 28.04.2006. The meeting convened by Shri B.D. Ghosh, Executive Secretary, JPC, Kolkata. JPC has shown Steel production through IF route as 8.96 million tonne. This was contested by AIIFA.

India will achieve a capacity of over 240 mt per year by 2020 if the slew of pacts with national and international steel corporates for setting up projects see the light of the day. According to an expert, if India can sustain 10 per cent growth in services, 12 per cent industrial growth and three per cent in agriculture for the next 15 years, then 220 million tonne by 2020 seems possible. However, this can only be sustained by a very strong urbanization drive. The draft National Steel Policy 2004 of the steel ministry had set a target of 110 mtpa by 2019-20 and the figure does seem conservative. India produced 38.1 mt in 2005. The growth of the steel markets is directly linked to gross domestic product as steel consumption follows GDP movement in absolute.

Various estimates based on different assumptions of domestic demand throw up consumption figures that vary between 92 mt by 2020 at a compounded annual growth rate (CAGR) of 7 per cent to 195 mt at a CAGR of 12.5 per cent. Industry experts say that a GDP growth rate of 8 per cent will result in the steel market growing at 12 per cent. India's infrastructure sector is expected to grow at a compounded annual growth rate (CAGR) of 15 per cent with $191.51 billion already committed into the sector over the next five years. Of this, $69 billion will come from the government as part of the 11th Five Year Plan.

Diverse opinions are being reported regarding desirability of exports of iron ore. While the Ministry of Mines pitched for unbridled exports of the minerals citing that the known iron ore reserves would last for more than 100 years, Ministry of Steel and major domestic steel producing companies refuting the observation of Mines Ministry, are against the export of iron ore. The country has an estimated iron ore resource of about 23 billion tonne. This include Haematite reserve of 12 bt and magnetite reserves of 11 bt. The Indian steel industry uses only Haematite ore.

In this issue of the Newsletter, we have given report on export of iron ore. Though Induction Furnace industry is not directly concerned with iron ore, but its availability is indirectly linked with the production of steel through Induction Furnaces. Induction melting furnaces use sponge iron and scrap as its input raw materials. For making sponge iron, iron ore is required. For integrated steel plants, iron ore is a primary input. For Induction melting furnace industry large integrated steel plants is one of the sources for its major material that is scrap. So if availability of iron ore hampers the production of integrated steel plants that will have impact on availability of scrap.

Indian Steel Alliance (ISA) has strongly objected for exports of iron ore. While export of fines and low grade ore can be made, but export of high-grade, i.e. 64% and above iron content should not be allowed to export. It is quite encouraging to note that Steel Minister Ram Vilas Paswan has recently written a letter to Commerce Minister and Ministry of Mines proposing to phase out exports of high grade ore in 5 years period.

Mr. R K Sharma, Secretary General, Federation of India, Mineral Industry is against the move of steel producers in regard to restricting export of iron ore. According to him India will be loosing foreign exchange and discriminates Foreign Direct investment in mining sector.

He wants proper exploration of iron ore in India be carried out which will give us an idea of increased iron ore reserves. In our view Mr. Sharma's opinion is not helpful. We are envisaging a production of over 100Mt in the near future. We need enough good quality iron ore for our requirement. We should not take the view that not foreign exchange will be lost by exporting iron ore. We can export iron ore having less than 60% iron content and Iron ore fines, as is due it now. In the interest of the country we must ban exports of high grade iron ore.

Orissa Chief Minister Naveen Patnaik has written to the Planning Commission and the Prime Minister's Office (PMO) for levying duty on power generation by independent power producers (IPPs). At present, under entry 53 of the State List, State Governments can only levy duty on consumption and sale of electricity and there is no duty on power generation either by the Centre or states.

From the report appearing in Economic Times dated 23rd Aug. 2006 it is learnt that for the states of H.P. & Uttaranchal the Department of Revenue have extended Excise duty concession as nil until March 31, 2010. This concession was available to these states until March 2007. Some time ago the Chief Minister of Haryana objected to these concessions as it affected the production in the neighboring states. We have already given this report in our IFNL. It is surprising that despite representations made by various associations and State Govt.'s, Ministry of Finance have succumbed to the demand of these states. We took up with Ministries of Steel and Finance to stop this concession and are again making suitable representation to them.

We would like to keep our members informed about the forthcoming Steel capacity in India thereby increasing steel production. The Induction Furnace units have to watch the situation so that they can take steps in advance in regard to their production and products. We find that in future stand alone Induction Furnace units cannot survive unless backward or forward integration is done. We are reproducing below a news item in regard to Posco Plant installation whose 1st phase may start production in next 5-6 years.

The South Korean steelmaker Posco plans to fund its proposed steel plant in Orissa by a mixture of equity and debt including borrowings from financial institutions in India. It hopes to begin construction work from April 2007. The first phase of Posco India steel plant is expected to be completed by 2010. Following the delay in land acquisition for the proposed steel plant due to various reasons, the company is making accommodative changes in its plans in order to stick to the schedule and hopes to being construction work from April 2007. The company has now decided to being construction with partial acquisition of land according to a spokesperson of POSCO.

As per reports domestic steel majors in private as well as public sector and sponge iron makers have come together under India's three apex chambers of commerce CII, ASSOCHAM and FICCI to lodge the protest. Steel companies have jointly asked for a meeting with the Prime Minister's Office to express their strong objection to the recommendations of the Hoda committee on captive mining and iron ore exports and have also sent a letter to the newly formed high level expert panel to review the recommendation of Hoda committee. Domestic steel companies claim that Hoda committee recommendations do not recognize the scarcity of iron ore resources in the country as it suggests that there are abundant resources available in the country and is against imposing any quantitative restrictions on exports. Whereas steel companies have recommended a cap on iron ore exports at the current level and a reduction of exports by 15% every year and completely phase it out by 2013. Imposition of a cess of Rs 500 on every tonne of ore exports is another suggestion that has been made.

Indian government has said that with the reduction in import duty, steel imports have increased, resulting in domestic steel utilities facing competition from the global steel giants. Mr Ram Vilas Paswan union minister of steel informed Lok Sabha that "With the reduction in import duty, steel imports have increased, resulting in competition with the global steel companies. Also with the proposed entry of international players like Posco and Mittal Steel, competition would be fiercer, especially in the light of the state of art technology available with such new entrants." He said that SAIL has announced its corporate plan 2012, which envisaged enhancing capacity and building competitiveness for maintaining leadership in the domestic steel market. The plan envisaged a growth in production to 22.5 million tonne of hot metal with an investment of about Rs. 37,000 crores. SAIL has also finalized extensive plans to improve the quality of products across the value chain and make value added steel, which would help in improving marketability and financial performance.

A meeting of the Parliamentary Consultative Committee attached to the Ministry of Chemicals & Fertilizers and Ministry of Steel was held in New Delhi with focus on the National Steel Policy. Mr Ram Vilas Paswan union minister of steel deliberated on the targets of NSP and the initiative taken by the Government to enhance production, consumption and distribution network. The Minister emphasized the need to use our national resources, especially high grade Iron Ore most judiciously. He also informed that the prices of iron ore had been rationalized and this has resulted in higher profits for the mining PSUs under the Ministry of Steel. The members were of the view that in order to ensure adequate availability in domestic requirement, exports of iron ore especially high grade iron ore should be curbed. Some of the MPs expressed concern at the press reports which suggested that the Hooda Committee in its report had recommended dismantling of the Captive Mining System. The Minister assured the members that due consideration would be given to their views while finalizing the Government views on the Hooda Committee's recommendations.

As regard increasing of steel production, Chairman SAIL informed that in the proposed expansion and modernization plan they plan to convert their production 100% through the continuous casting route. The MPs were also informed that SAIL and RINL were coordinating their marketing efforts and facilities. Further, efforts are being made to bring about complete transparency in various activities. With a view to achieve the goal of 110million tonnes of steel production by 2019-20, the NSP seeks to identify as well as remove the supply side constraints to the growth of the industry.

It is reported that nearly 150 Induction Furnace units in Punjab are facing a production loss of Rs 30 crore per day due to the indefinite power cut imposed on the steel sector creating a steel shortage in the state. Punjab State Electricity Board has recently imposed complete power cut on induction furnaces of Punjab in view of the ongoing power crisis in the state.

It is reported that the Global Environment Facility - UNDP Steel Project would soon select two small and medium enterprises in the steel re-rolling mills sector from the state of Orissa as model units for promotion and demonstration of energy efficient technology among other industrial units. The project envisages selection of 30 plants as model units to demonstrate the technology packages and develop 150 units to carry forward the achievement of the model units. In the first phase of the three phase program, already 13 model units have been established in the country and 2 plants from Orissa would be taken in during the second phase.

5 year GEF-UNDP Steel Project started in 2005 with $7 million contribution from UNDP and $7.3 million from the union ministry of steel and mines. The project is being implemented country wide with thrust on bringing down end use energy levels not only to reduce green house gas emissions and pollution but also improve productivity and cost competitiveness in the units. The project aims at making entrepreneurs and industrial units aware of the energy efficient technologies and assisting them in adopting the technology. Mr S Dewan national project coordinator told media that in the face of an industrial boom in the country establishing units with the cutting edge to handle the challenges of competition had become the key to success and high energy consumption still continues to be a big hurdle in the way of maintaining profitability and competitiveness. He said "Average furnace oil consumption is 45 to 50 liter per tonne, at least 12 liter more than that in other countries. The objective is to bring down the consumption rate to 22 liter and then gradually to the end target of 15-16 liter."

In an action taken report on the progress of the National Steel Policy implementation, steel ministry has reported that it proposes to function as a nodal point to monitor the progress made in the upcoming steel projects. It is reported that Indian steel ministry is working out an action plan to meet the raw material requirements of the steel sector in consultation with Jharkhand, Orissa and Chhattisgarh as many projects are coming up in these states and their progress is hampered by delay in assuring raw material supply including iron ore. Iron ore rich states of Jharkhand, Orissa and Chhattisgarh have signed a total of 116 MoU's totaling to more than 146 million tonne capacity addition but the implementation is slow.

A major slowdown in power generation as well as steel and cement production resulted in a fall in the overall infrastructure growth to 6.2% in June 2006 compared with 8.3% in the corresponding period a year ago. Coal production also grew strongly by 11.9% in June this year, as against 3.4 registered a year ago. However, electricity generation declined to 4.5% from 9.4% in June 2005. Growth in steel production was lower at 5.6% in June this year, compared with 12.6% a year ago. The above may be kindly be noted by the members for information.

We have been keeping our members informed about objections raised by many steel producers and others, in regard to export of iron ore. It is reported that exports of iron ore are increasing annually by 15%. Indian Steel Alliance has asked Prime Minister to intervene and not allow exports on Iron Ore. We are producing below a report published in Financial Express on 11th Aug. 2006, in this regard. "The Indian Steel Alliance (ISA) has sought Prime Minister Manmohan Singh's intervention to stop the export of iron ore, failing which the growth of the steel industry would be seriously jeopardized. It is clear that by encouraging export of iron ore and throttling of steel exports, we are transferring India's competitive advantage to China, Korea and Japan. In the process we are going back to a colonial economy, becoming a mere supplier of commodities and importer of finished product", ISA President Moosa Raza wrote to Prime Minister, highlighting the "grave implications" of the Anwarul Hoda Committee's recommendations.

He pointed out that iron ore rich nations like Ukraine, Kazakhstan, USA and China do not export any ore while India was exporting 90 million tonne annually. "Exports are going up annually at 15% depleting our meagre ore reserves at an alarming pace", he warned. By exporting such large quantities of iron ore, we are giving wrong signals to prospective Foreign Direct Investment (FDI). If iron ore of high quality is accessible in the international market, what is the incentive for FDI to come in to India," he asked. Raza pointed out that if the country's capacity grew at the anticipated rate and exports grew at 15 percent annually India's hematite reserves would not last for more than 20 to 25 years. "In the light of these considerations, ISA strongly urges that government take a serious look at restraining the growth of iron ore export and taper it off within reasonable period", he suggested.

We are reproducing below the name and address of a new member who have joined AIIFA recently. The Association is grateful to the company for their becoming member of the Association.

Name and Address for Correspondence	:	ATAM CONCAST STEELS PVT. LTD Village Bajra, Rahon Road Ludhiana (Punjab) Tel: 0161-2691400 Fax: 0161-269500 Email: nkjainatam@rediffmail.com
Membership No.	:	612
Name of the Chief Executive	:	Mr. Naresh Jain
Products made	:	M.S. Ingots & Steel Castings

The members may be aware that the Ministry of Company Affairs had issued a notice on 31st July 2006 announcing that filing by companies without the use of Digital Signature Certificate by the authorized signatories would be accepted till 15th of September 2006 (as against 31st July as indicateed earlier)

Further, the Ministry has decided that all filing from September 2006 will be accepted under MCA-21 system only, under the Digital signatores of the authorized persons. There will be no further extension of this cut off date.

In view of the above, all authorized signatories of companies and the professionals are advised to procure Class 2 category or higher Digital Signatures certificate well before September 2006.

Directors in companies are also advised to intimate Director Identification Number (DIN) to their companies at the earlist. For further details on the above subject, members may refer to the website of the Ministry of Company Affairs: www.mca.gov.in

To
All Chief Commissioners of Customs
All Chief Commissioners of Customs & Central Excise,
All Commissioners of Customs/Customs (Prev.)/Customs & Central Excise/Central Excise,
DG, CEIB, New Delhi.
DG, Central Excise Intelligence/DGRI/DG (Export Promotion)/DGI/DG NACEN/DG (Systems & Data Management),
Chief Departmental Representative, Customs, Excise & Service Tax Appellate Tribunal, West Block-2, R.K. Puram, N.Delhi.

Re-export of goods imported under Served from India Scheme (SFIS) and Vishesh Krishi and Gram Udyog Yojana (VKGUY) found defective or unit for use-reg.

In terms of Para 3.18.2 and Para 3.19.9 of the Handbook of Procedures, Vol. I of Foreign Trade Policy, goods imported under Served from India Scheme (SFIS) and Vishesh Krishi and Gram Udyog Yojana (VKGUY), which are found defective or unit for use, may be re-exported as per guidelines issued by the Departmental of Revenue. In such cases 98% of the Credit amount debited against the SFIS/VKGUY scrip shall be generated in the form of a Certificate.

The matter has been examined further by the Ministry and it has been decided that in cases where the goods imported under SFIS/VKGUY are found defective or unit for use, the same may be permitted to be re-exported by the Commissioner of Customs subject to the following conditions:-

i) Re-export of goods takes place from the same port from where the goods were imported;
ii) The goods are re-exported within 6 months from the date of Import;
iii) The Deputy Commissioner/Assistant Commissioner of Customs, as the case may be, is satisfied about the identity of the goods; and
iv) The goods are not put into use after import.

In such cases, on re-export of goods, 98% of the credit amount debited in the SFIS/VKGUY scrip shall be generated by the concerned Custom House in the form of a Certificate. The said Certificate shall also contain details of the original SFIS/VKGUY scrip and the value, quantity and description of the goods exported.

Based on the aforesaid certificate issued by Customs, the concerned Regional Authority shall issue fresh SFIS/VKGUY scrip for 98% of the credit amount for the same port of registration and the validity of the SFIS/VKGUY scrip so issued shall be for a period equivalent to the balance period available in the earlier SFIS/VKGUY scrip on the date of import of such defective/unfit for use goods.

A suitable Public Notice and Standing Order may be issued for the guidance of the trade and staff. Difficulties faced, if any in implementation of the Circular may be brought to the notice of the Board at an early date.