Cl-iAPTER I
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Cl-iAPTER I
INTRODUCTION AND HISTORY OF STEEL INDUSTRY IN INDIA
PART-I INTRODUCTION
India's is a mixed economy with its two species-- Public
Sector and Private Sector. After independence, the National
Government very firmly resolved to translate the British
neglected, down-troden and undeveloped economy into a splen
did and outstanding one, as rapidly as feasibl~ through sound
footing of Industrial Policy Resolutions (IPR) and Five-Year
Plans .• Accordingly, IPRs 1948, 1956 etc. and many other eco
nomic legislations have been launched, Seven Five-Year Plans
have passed off and Public Sector, to attain multi-dimentio
nal ends, has been rejuvenated and grown through wear and
tear both voluminously and numerically. The Public Sector,
however, has come into existance, primarily, to achieve the
following general and specific objectives :
A. General Objectives :
i. Accelerating economic growth through, inter-alia, crea
tion of infrastructural facilities involving heavy invest
ments in the areas either non-profitable or low profitable
or involving long gestation period;
ii. Achieving some social objectives, such as equidistribu
tion of income and wealth, development of backward and under
privileged areas and people respectively.
B. Specific Objectives :
i. Reviving Private Enterprises (PvEs);
ii. Facilitating aid from, and trade with, East European
Countries (EEC);
iii. Controlling the •commanding Heights• of the economy;
iv. Providing fair deal to labour;
· v. Competing with, and serving as a model to, PvEs1
vi. Solving unemployment problems;
vii. Ushering in a socialistic pattern of society;
viii. Providing commercial organisations for specific
schemes;
2
ix. Ensuring and increasing production of essential goods
and services;
x. Ensuring proper utilisation of natural resources;
xi. Reducing foreign deficits;
xii. Securing economies of scale;
xiii. Augmenting state revenues; etc.
On examination of the objectives of Public sector Enterpris
es (PEs), it may be observed that the objectives are an ad-
mixture of non-commercial and commercial obligations as
varied as vast. The complexity, multiplicity, uncertainty,
lack of precision and clarity are the saliant features of PE
objectives of which 'Augmenting state revenues', however,
arrests particular attention. As such, PEs are required to
provide revenues to the State Exchequer in a big way. It is
also imperative from the budget estimates of the Central
----------------------------------------------·-----------------
3
Government where it appears as a source, viz. 'Dividend paid
on share capital' of running Public Enterprises1
• Moreover,
white paper issued in November, 1967 prescribed for the
nationalised industries to earn a rate of return ranging
from break-even point {BEP) to 12.5 per cent2• In addition,
different Five-Year Plans have highlighted the limitation of
raising further revenues from taxation and have stressed on
the need for raising resources through PEs, state trading
and fi~al measures. FUrthermore, the Third Five-Year Plan
has categorically underlined that in a developing economy
the PEs constitute a ready and increasingly important source
for financing investment either for the expansion of the PE
yielding such surpluses or elsewhere in the economy.PEs also
have been urged to afford to generate resources for declar-
ing dividend at least from 6 per cent to 15 per cent and
from 10 per cent to 15 per cent in case of manufacturing
companies and trading companies respectively3 with the much
aspirated end in view. The Bureau of Public Enterprises(BPE)
contemplates the PEs to 'ensure that their operations yield
adequate surpluses not only for replacement and renewal of
their assets but also to meet the needs of expansion and
growth'. The responsibility is greater in the case of enter-
prises which have high potential for expansion and whose
capital needs are relatively large4 • The Parliamentary
Committee on Public Undertakings (CPU),again,has expressed
the hope that PEs will, in due course, be generating more 5
surpluses to be deployed for internal expansion. Galbraith
4
also maintains the similar view, when he states that a mea-
sure of PE-performance should be earnings put into its expan
sion6. A:,~ Raj iv Gandhi, the former Prime Minister of India)
also emphatically pronounced that PE would not be allowed to
7 incur losses at the expense of the anti-poverty programmes •
Mention may be made in this score that company form of orga-
nisation in PEs, which is believed to be superior to·public
corporation for the discharge of substantially commercial
8 functions for its greater flexibility, was introduced early
in 50s (12th November, 1950) 9 with this end in view. PEs in
India are, thus, expected, as in the UK, to operate in a way
as to meet their full cost of production and also to make
substantial contribution towards the cost of their capital
development out of their own earnings so as, eventual!~ to
reduce the claim upon the nation's savings and the burden on
10 the Exchequer • In fact, Government laid greater emphasis
on the growth of PEs and on its accomplishing social welfare
and benefits as well, more or less, upto the Third Plan.
Thereafter, it changed its attitude and began to put more
and more stress on its (PE) running commercially. Notwith-
standing fabulous investments in Public sector in general
and in Government companies in particular, leading to enor-
mous growth of PEs as well as of Government companies, hopes
remain hopes. In reality, the financial performance of PEs
in general and of Government companies in particular is far
from being satisfactory. Rather, most of the PEs have been
sustaining losses year in and year out. The fact may be
5
verified from the following pages.
TABLE 1.1
• PUBLIC SECTOR OUTLAY UNDER THE PLAN PERIODS
(Rs. in crores)
Public Private Percentage of
Plan Total Public Sector Sector Sector to Total
1 2 3 4 lx 4
100 = 5
I 1960 1800 3760 52
II 4672 3100 7772 60
III 8577 4190 12767 67
IV 13655 8980 22635 60
v 31400 16161 47561 66
VI 97500 74710 172210 57
VII 180000 168148 348148 51
* Plan outlay differs from plan investment. For example, of
the Public Sector outlay of ~.1,80,000 crores in the seventh
Plan, the current outlays, mainly for the maintenance of ser-
vices which do not create new assets, would be ~.25,782 crores.
Source: Narain, L., Principles and Practices of Public .Enter
prises Management, 3rd Ed., S.Chand & Company Ltd.,New Delhi,
1989, p.45.
On analysis of Table 1.1 it becomes crystal clear that thro-
ughout the Seven Plan Periods Public Sector was provided with/
6
on an average, about 59 per cent of the total outlays.Again,
the percentage allocation of outlays to Public Sector grew
from 0.52 in the First Plan to a soaring height of 0.67 in
the Third Plan. Of course, subsequently the share of outlay
gradually diminished to 0.51 in the Seventh Plan.
Quite in consonance with the growth of Public Sector as a
whole, the central PEs also grew. The gro~th of investment
in, and number of, such PEs during 1951-91 may be gauged
from Table 1.2.
TABLE 1.2
GROWTH OF CENTRAL GOVERNMENT PEs DURING 1951-91
(Rs. in crores)
As on lst April No. of Units Total Investments
1951 5 29
1956 21 81
1961 47 948
1969 84 3897
1974 122 6237
1980 179 18150
1985 215 42673
1988 225 71123
1989 232 85564
1991 246 NA
Source: PE Survey- 1988-89 and The Economic Times,Calcutta,
dated 28.2.92, p.16.
7
An x-ray of Table 1.2 reveals that the investment in central
PEs increased from a meagre amount of ~.29 crores in 1951 to
a large volume of ~.85,564 crores in 1989. Again, in numeri
cal terms such PEs rose from 5 to 232 during the said period
and further to 246 in 1990-91. Thus, the advancement of such
PEs in terms of investment and number during the period un
der reference was an impressive one. Most interestingly, it
may be alluded to that such PEs constituted as high as 74
per cent.of the total paid-up capital of the entire corpo
rate sector of the country, while the number of such PEs 11
formed less than 1.2 per cent (943) of the total (82903)
indicating the large size of such PEs either in terms of a
unit or as a whole.
Under the perspective of such a colossal investment in, and
growth of, PEs, here it becomes imperative to examine the
financial performance of such PEs preceded by a perusal of
the role assigned to them, which may be visualised from
Table 1.3.
On analysis of Table 1.3 it would be clear that during
First and Second PlansRailways alone was expected to contri
bute 4.2 per cent and 3.12 per cent respectively of the
total contemplated investment, while from the Third Plan on
wards PEs other than Railways were also supposed to share
the total contribution, which fact is well-noted in the
Table. PEs including Railways were targetted to provide
8
TABLE 1.3
CONTEMPLATED SOURCE OF FINANCE DURING PLAN PERIODS
Plan Year Railways
I 1951-56 115.40
II 1956-61 150.00
III 1961-66 150.00
IV 1969-74 -115.00
v 197 4-79 849.00
VI 1980-85 1698.00
VII 1985-90
I
Percentage: Other to Total PEs
4.20
3.12
2.07 440
-1.02 1300
2.08 1734
1.74 7697
*3584
{Rs. in crores)
Percentage to Total
6.06
8.04
4.26
7.89
19.70
* Included under 'Balance from current revenues and other
resources •.
Source: (i) Five-Year Plans, a draft outline, Planning
Commission, New Delhi.
(ii) seventh Five-Year Plan 1985-90, Vol.I, Planning
Commission, New Delhi.
8.13 per cent, 7.02 per cent, 6.34 per cent, 9.63 per cent
and 19.70 per cent respectively during Third Plan, Fourth
Plan, Fifth Plan, Sixth Plan and Seventh Plan respectively
i.e. on an average, 10.16 per cent during the period from
Third Plan to Seventh Plan.
But the financial performance of the PEs is absolutely at
variance with such expectation. An examination of the
9
financial performance of the Central PEs (excluding Insurance
Companies) alone placed in Table 1.4 may be of great help to
conceive of the fact.
TABLE 1. 4
FINANCIAL PERFORMANCE OF RUNNING CENTRAL PEs (EXCLUDING INSU
RANCE COMPANIES) DURING 1969-91
I
Period : No. of: : Units
1969-70
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1990-91
I I
• I
73
87
93
101
114
120
121
149
155
159
169
168
188
193
201
207
211
214
220
222
236
*** I* Capital: EBIT! Employ-: : ed (CE): :
3281
3606
4089
4756
5376
6627
8824
10887
12130
13696
16182
18207
21935
26590
29856
36382
42965
51835
55617
67535
NA
*
139
145
169
343
334
559
668
1028
915
1071
1229
1418
2654
3469
6565
4628
5287
6521
6940
8545
NA
I I
EBT I** ' ! EAT :
15
20
22
81
149
312
306
421
160
185
255
19
1025
1547
1480
2049
2173
3101
3353
4376
NA
I I I I I I I I I I I I
-3
-3
-19
18
64
184
129
184
-92
-40
-47
-203
446
618
240
909
1172
1771
2030
2981
NA
(Rs. in crores)
Rate of Return
EBIT to CE
4.2
4.0
4.1
5.1
6.2
8.4
7.6
9.4
7.5
7.7
7.6
7.8
12.1
13.1
11.9
12.7
12.3
12.6
12.5
12.7
NA
EAT to CE
0.5
0.4
1.2
2.8
1.5
1.7
-0.8
-0.3
-3 .o -1.1
2.0
2.3
o.a 2.5
2.8
3.4
3.6
4.4
2.3
E~IT=Gross Profit, EAT=Net Profit, CE=Net{Fixed & Current) Assets. Source:Compiled from PE survey - 1988-89, Vol.I and earlier issues and The Economic Times,Calcutta,dated 28.2.92, p.16.
10
The last column of Table 1.4 highlights that the rate of re
turn of Central PEs (excluding Insurance Companies) during
1969-91 (save 1989-90,the datafor which was not available) in
terms of gross profit as percentage to total capital employ
ed varied between 4.0 in 1970-71 and 13.1 in 1982-83, while
that in terms of net profit as percentage to capital employ
ed ranged from (-J ·~ 3 in 1979-80 to 4.4 in 1988-89.Thus,the
financial performance of the CenLral PEs is quite gruesome.
Again, the rate of return expressed in terms of net profit
as percentage to capital employed got further reduced due to
interest and tax burden. Incidentally, it merits mention
that according to an official estimate the country lost at
least ~.10,000 crores during 1951-78 for poor performance of
Central Government Companies alone12 •
Further, when the financial performance of steel Authority
of India Ltd. (SAIL) is looked through,more or less, a simi
lar picture is come across. Purposively, Table 1.5 follows
for perusal.
Although SAIL (formerly HSL) adopted the objective, while
adopting the principle of management by objectives (MBO) in
February, 1970, that the company would endeavour to earn a
fair return on investment13 and the company secured note
worthy rank in terms of investment in top ten PEs14 , viz.,
first in 1984-85 and third in three consecutive years since
1986-87, most ironically, as appears from Table 1.5, the
11
TABLE 1.5
FINANCIAL PERFORMANCE OF SAIL DURING 1973-91
(Rs. in crores)
Year Profit and Loss Profit and Loss during the year (cumulative)
1973-74 4.71 - 351.29
1974-75 48.24 - 303.05
197 5-76 44.66 - 258.39
1976-77 67.46 - 190.93
1977-78 46.78 - 144.15
1978-79 65.84 78.31
1979-80 30.23 48.08
1980-81 1.01 47.07
1981-82 39.11 7.96
1982-83 - 105.77 - 113.73
1983-84 - 214.61 - 328.34
1984-85 4.24 - 324.10
1985-86 159.00 - 165.10
1986-87 52.81 - 112.29
1987-88 7 5. 27 37.02
1988-89 273.64 236.6 2
1989-90 140.78 377.40
1990-91 244.69 622.09
Source: Financial Year Book - 1989-90, Durgapur Steel Plant,
p.6 and Annual Report - 1990-91, SAIL, p.24.
12
·------------------------------------company carried on an accumulated loss during 1973-88.Again,
though the company earned profit in all the years during
1973-91 save 1982-84, its volume was too humble to wipe off
the cumul,.ative loss until 1988-89 from when the scenario
began to take a turn for the better under the able leader-
ship of Mr. V.Krisnamurthy, its the then Chairman.
Most wonderfully, the Tata Iron and Steel Company Limited
(TISCO), a Non-Government Company, on the other plane,holds
the record of remaining blue, that may be held out in Table
1. 6.
TABLE 1.6
FINANCIAL PERFORMANCE OF TISCO DURING 1973-91
(Rs. in crores)
Year Profit Profit
After Tax Year After Tax
1973-74 9.77 • 1982-83 44.87 • I
• 1974-75 15.18 • 1983-84 20.01 • • • 197 5-76 9.42
I 1984-85 84.74 I
I
1976-77 12 .o 5 1985-86 107.68
1977-78 7.77 1986-87 87.52
1978-79 17.55 1987-88 92.15
1979-80 15.93 1988-89 154.34
1980-81 26.46 1989-90 148.53
1981-82 47.65 1990-91 160.13
Source: Annual Reports of Tiseo - 1987-88, p.43 and 1988-89,
1989-90, 1990-91 -- P/L A/cs.
13
Just a glance over Table 1.6 would make one perceive that
the financial performance of Tiseo during 1973-91 was never
negative. Rather, it was impressive. It varied between~7.77
crores in 1977--78 and ~.160.13 crores in 1990-91. Inciden-
tally, it may further be pointed out that the financial per
formance of the company had been bright all through its ear
lS eer • In a word, Tiseo is unique in its operation and mar-
vellous in its progress.
Thus, such a dismal, bleak, and unpelatable financialper-
formance of PEs in general and of SAIL in particular has
evoked .:,Qerimonious debate, critic ism and disillusionment as
well to the PEs leading to a tendency of privatisation and
divestment of 20 per cent of equity of selected PEs, projec-
16 ted through 1990-91-budget of Government of India • Again,
the criticism levelled against SAIL has further been sharp-
ened particularly when its financial performance is compared J )
with that of Tiseo. SUffice it to state that the fittest
will survive. Hence, the economic viability of the PEs has
turned into a key question to ensure the success and survi-
val of the Public Sector on the one hand and the growth and
development of the economy as a whole on .the other.Otherwise,
the very birth of the Public Sector will, drastically, be
frustrated. On the contrary, there is no reason to believe
why most of the grown-up PEs including SAIL operating or
supposedly operating commercially suffer from losses. The
poor financial performance of SAIL can neither be denied nor
14
can it be explained away on the ground of social obligations.
Rather, it seems at the outset that such a poor performance
of the company also may be attributable to, inter-alia, un-
sound capital structure decision, the area of financial
management receiving attention less than that it really de-
serves. Capital structure decision is an all important area
of financial management. It has a significant bearing on the
17 profitability, image, cost of capital and value of the firm •
Therefore, an analysis of the capital structure of a firm
will enable one to assess its financial strength and weak-
ness.
RATIONALE OF THE STUDY
The unprecedented, untoward and unpleasant phenomenon of PEs,
particularly of the central ones including SAIL, stated so
far goads us to embark upon an indepth analytical study of
capital structure of SAIL. More categorically,the study aims
at (i) identifying the nature, type, peculiarity of, and
changes in, the capital structure of the firm; (ii) assess-
ing the impact of capital structure of the firm on its profi-
tability; (iii) focusing on the financial performance of the
firm -- through a comparative study.
SAIL is selected for the study on account of a number of rea-
sons. It belongs to the Iron and Steel Industry, the mother
of all industries, the centrepiece of the economy,the embodi-
ment of strength, the provider of tempo of progress to the
15
economy as a whole and hence the top priority holder18 dur
ing the Second Plan laying greater emphasis on industriali-
sation in the country and thereby commissioning under Public along with some
Sector in 1957 three Steel Plantstha~4others formed later1 gave
birth to SAIL as an integrated Steel Plant under Public Sec-
tor in 1972-73. Moreover, SAIL is deemed to be the represen-
tative simultaneously of PEs, Central PEs and Central Govern-
ment Companies in terms of investment, sale and employment
etc. Besides, SAIL is organised under company form of orga-
nisation that runsoY'tS:believed to be run on conunercial basis.
However, TISCO, a successfully operating Non-Government Com-
pany, is brought into the study for the sake of comparison to
get the study more convincing, effective and purposeful. The
cause behind the exclusion of other steel plants is that
such firms are either very small (mini plants) or re-rolling
mills forming the secondary sector and producing finished
products only unlike SAIL and TISCO that are integrated
steel plants. ', -]ndeed, the number of such mini plants and
re-rolling mills is too large and the amount of capacity as
well as production per plant thereof is too small to be wor-
thy of being considered in the present study. Again, these
units are too widely located to be utilised as sources of
information by an individual research worker with a humble
capacity. Table 1.7, 1.8 and 1.9 together will testify to
the statement.
16
TABLE 1.7
SHARE OF PRODUCTION OF SALABLE STEEL IN 1988~
Production
(Figures in MT) . I
I I Firm
:-------------------------~------------: : Others ! SAIL TISCO ! (167 Units) Total
:----~.----~.~----~.----~~----~.~----~----~~-------: Vol !% age! Vol !% age: Vol :% age Vol !% age
6.8 58 2.0 16 3.18 26 11.98 100
Source: Compiled and computed from ARs of SAIL, TISCO and
Deptt. of Steel, Ministry of steel & Mines, Govt. of India.
TABLE 1.8
THE POSITION OF SAIL AND TISCO IN GLOBAL STEEL PRODUCTION
(Figures in MT)
YEAR
Firm 1985 1986 1987 1988 I I I I
Rank: Qty Rank: Oty Rank! Qty Rank: Qty
SAIL 14 6.9 14 13 7.3 13 8.4
Tiseo 45 2.1 46 2.2 46 2.3 47 2.3
Source: Statistics of Iron and Steel Industry, 9th ed., SAIL,
New Delhi, 1990, p.396.
17
TABLE 1.9
LOCATION OF MINI AND RE-ROLLING STEEL UNITS AS ON 31.3.1989
Location No.of Location No.of Location No.of
Units Units Units
A.P. 13 Hariyana 13 Orissa 3
Assam 5 H.P. 5 Panjab 9
Bihar 9 Karnatak 12 Pondicheri 3
Chandigarh 1 Kerala 2 Rajasthan 8
Delhi 4 J & K 2- T.N. 8
Goa 1 M.P. 19 U.P. 26
Gujrat 6 Mahar astra 35 W.B. 27
Total 211 Units with 7903110 Tonnes of Capacity
SOurce: Ibid. I p .178.
It does emerge from Table 1.7 that during 1988-89 the produc-
tion of salable steel of 167 mini plants and re-rolling mills
forming the secondary sector of Steel Industry provided only
26 per cent of the total production, while SAIL and TISCO
contributed as high as 58 per cent and 16 per cent respec-
tively. Again, as on 31.3.89 the total capacity of such small
units numbering 211 receiving licence or letter of intent was
7903110 tonnes i.e., on an average, only 37456 tonnes per
unit, exhibited by Table 1.9. so far as Table 1.8 is concern-
ed, SAIL and Tiseo unlike the said others, managed to main-
_tain notable ranks around 13th and 46th respectively in glo
bal steel production schedule by producing around 7.6 MTPA
18
and 2 MTPA respectively of steel during 1985-88. Table 1.9
further reveals that the mini and re-rolling units are quite
scattered throughout the vast area of the country in outline
from Kashmir to Kanyakurnarika.
However, in view of the special significance of the year,
1978-7~ to SAIL for enactment of Public Sector Iron & Steel
Companies (Restructuring and Miscellaneous Provisions) Act -
1978 turning SAIL into an operational company from a hold
ing company, the study commences from 1978-79.Again, in hand
to cover up Sixth and Seventh Plans as well as to make the
study upto date as far as practicable, the period of study
is extended upto 1990-91. Thus, the period of study encom
passes a period of thirteen years.
METHODOLOGY
The study is based.primarily on the published data in view
of stupendous as well as enormous difficulty in the collec
tion of information from the primary source, which happens
to be beyond the capacity of a single research student. How
ever, an attempt is made to collect pertinent information
and necessary data from SAIL and Tiseo. With this end in
view,different units of SAIL and TISCO are visited and
interviews with important personnel are carried out. Annual
Reports (ARs) of SAIL, TISCO, Ministry of Steel and Mines,
BPE, CPU, Estimate Committee, Statistics of Iron and steel
Industry, RBI Bulletin, Bombay Stock Exchange Official
19
Directory, Government Policy for the Management of Public
Enterprises, Vol.I (Financial Management Section), various
periodicals, newspapers, text and reference books etc. are
exclusively and comprehensively husbandised.
DESIGN OF THE WORK
The study is fragmented into Five Chapters as under :
Chapter One is composed of two parts. First part deals with
the introduction of the study, while second one comprises
the evolution and growth of Iron and Steel Industry in India.
Chapter Two is equipped with the concept of Capital and Capi
tal Structure. It is also adorned with some other salient
concepts of Financiai Management, e.g., the cost of capital,
the financial leverage, the optimal capital structure inclu
ding the capital structure theories. The chapter further co
vers discussion on the Capital Structure and Cost of Capital
of PEs, the determinants of Capital Structure, the analysis
of Capital Structure of PvEs and PEs, etc.
Chapter Three is enveloped with the discussion on Sources of
Capital.
Chapter Four is devoted to the identification of tools and
techniques for analysis of Capital Structure including profi
tability of firms, followed by an indepth·analytical compara
tive study of Capital Structure of SAIL and TISCO,showing the
impact of Capital Structure on Profitability of the Firms,
particularly SAIL.
20
Chapter Five, being the last one, is overcast with the epi
logue of the study.
21
PART-II
EVOLUTION AND GROWTH OF IRON AND STEEL INDUSTRY IN INDIA
At the very outset of our study we set to deal with the evo-
lution and growth of Iron and Steel Industry in India. As
such, we shall fragment our course of action in several seg-
ments. Firstly, we shall describe the evolution and growth
of the industry in India in general from primitive age to
date. Thereafter, the stream of our discussion will get bi-
furcated to concentrate on TISCO and SAIL severally.
EVOLUTION AND GROWTH OF THE INDUSTRY
Modern industrial civilisation dawned through iron age. An
idea of the early development of Iron and Steel Industry in
India is a prerequisite to an understanding of the present
trends of development of t?is industry. Iron was possibly
used in Egypt during 7000 - 6000 B.C. but such iron was of
meteoric origin and that manufactured iron came into general
use only after Assyrian invasion to Egypt in 666 a.c. 19 .con-
tending thisArchaeologists• view, experts hold that an iron
age preceded even the bronze age in India. The use of steel
in shapping and dressing Egyptian Pyramids convinced Percy
20 (1864 A.D.) about this •
EARLY DAYS OF IRON INDUSTRY IN INDIA
That the art of smelting iron was known in India in ancient
times has been referred to in the Rig-Veda (2000 B.C.). The
22
ancient Indian steel (Wootz), the carbon steel, produced in
Hyderabad and Madras, was highly priced in the world market~ 1
In fact, India is considered to be the centre of origin of
the Iron and Steel Industry in the world. Indian iron age
began most probably about 3000 years before that started in
Europe22 • The antiquity and ingenuity of the Indian process
of steel-making are equally astonishing. The great 7 meter . 23
high iron pillar , older than the Outab Minar (Delhi) by
1000 years, sharing the precincts of the latter since 400
A.D., getting no rust, bears the living testimony to the un
matched skills of ancient Indian metallurgists. Besides, (i)
the 50 feet high pillar, 7 tonnes more than the pillar men-
tioned above, erected about 321 A.D. at Dhar, the ancient
capital of Malwa, West of Indore; (ii) about 20 pieces of
beams of the sun Temple at Konarak near Puri referring to
1300 A.D.1 (iii) the Damascus blade of age old universal re
pute; (iv) the acceptance in 400 B.C. by Alexandar,the great,
of a steel bar weighing only 13 lbs presented by Poru, the
Indian King; (v) in Marcopolo's travels, a reference to anda-
nique, a corruption of the Persian hundawaniy, i.e. Indian
steel; (vi) the existence of Iron and Steel Industry in the
'Kingdom of Golconda', mentioned by Tavernier, the 17th cen-
tury French traveller; (vii) the Arab Edrisi•s declaration
'the Hindus excel in the manufacture of iron', etc. are
the dazzling proofs of both antiquity and ingenuity of the
Indian Iron and Steel Industry in the Wor1J.4 Moreover, the
discovery of the slag heaps in many parts of the country,
23
outside Indo-Gangetic alluvial plains, testify to the per-
vassiveness of the industry throughout the whole of the
country. It is the supply of iron ore and char coal that
were conducive to, and at the root of, such primitive deve-
lopment of the industry. It was only in the last century
that the time-honoured skills of Indian ironsmiths began to
die25 for disappearance of the forests on the one hand and
availability of produced iron from Europe at cheaper rates
with the advent of industrial revolution on the other.
THE ANCIENT PROCESS OF STEEL-MAKING IN INDIA
26 Dr. Krishnan states that the ore was gathered, beaten upto
the size of coarse sand, winnowed in the breeze or washed in
a stream to separate the associated gangue;the furnaces were
built of locally available clay and smelting was done by
'rule-of-thumb' methods handed down through generations with
the help of the artis ans• family: charcoal was the fuel; no
flux was used: as a result, it led to enormous waste of ore,
fuel and time: the plastic state of iron but not fluid in
the furnace, was taken out and repeatedly heated and hammer-
ed to separate the grains of ore and slag from the iron.
Excellent wrought iron of high purity and malleability was
produced by this primitive and well-tried process.Moreover,
the primitive art of making iron comprised heating a mixture
of iron and charcoal in very small mud-made furnaces with
the help of air blast supplied by goat skin.The mud furnaces
24
used in the country were of three kinds, the first one was
being found in the Decan and parts of Madras, while the
second and the third ones were being found in U.P. and north
of India. Each furnace was worked with two goat skin bellows
to ensure a continuous blast of air. The charcoal fuel was
made of teak, sal, babul etc., the hard woods. However, the
process of producing steel from iron ore is also explained
27 in the Ain I Akbari, the history of the Mughals •
IRON-MAKING INDUSTRY IN THE 19TH CENTURY
TAMIL NADU (T.N.)
Indian Iron, Steel and Chrome Company, set up at Porto Novo
in 1830 by Joshua Marshal Heath, a civil servant of the East
India Company Ltd., smelted iron ore in India for the first
time. Furnaces, forges and rolling mills were also commiss-
ioned in 1833 at Boypur, Malabar. Iron ore was fetched from
hilly interior of South Arcot district -- from near Sankar-
puram and Madura hill areas and charcoal was secured from
the vicinity of the Works at the first stage and from a dis-
tance of 25 miles or so at the later stage for Porto Novo
Works, while the Boypur Works secured ore from Laterite near
Calicot and Feroke. East India Iron Company,formed in London
in 1853, erected smelters and Works at Tiruvanna Malai in
North Arcot and at Palampati on the Cauvery with the iron
ore from Kanju Malai in Salem and charcoal from Solapaddi.
Each furnace produced 6 tonnes of pig iron of paramount
25
quality daily finding ready market in England. Any way, the
Works necessitated costly alterations on the one hand and
supply of charcoal and iron ore fell short on the other. It
resulted in the collapse of the Works at Palampati, Porto
Novo and Boypur in 1858, 1866 and 1867 respectively.
WEST BENGAL (W.B.)
Here at Deucha and other places in the district of Birbhum,
there were about 70 comparatively larger furnaces each pro
ducing 34 tonnes of iron per annum, indicating efficient
smelting operations. In 1855 Birbhum Iron Works Company was
set up by M/s Macky and Company, Calcutta selecting the fac
tory place at Mahammad Bazar. In 1875 M/s Burn and Company
of Calcutta commenced its operation. But it was abandoned
due to non-profitability and loss for limited supply of
charcoal. An earlier move, in 1839 by M/s Jessop and Company
to start smelting operations at Burdwan with coke, was also
foiled as the iron could not be brought to a molten state.
Later, some steps, taken by Bengal Coal Company in this
direction, were also eventually nipped in the bud. In 1874
Bengal Iron Works Company was formed erecting its Plant at
Kulti in 1875. In 1878 two blast furnaces of the Works pro
duced 40 tonnes of pig iron daily. The factory had a foundry
to convert the pig iron, unsuitable for conversion into
wrought iron or steel largely because of high phosphorous
content, into railway plot sleepers. What with operational
--
26
inefficiency and what with high rate of int~rest on loan,the
cost of production amounted to ~.38 per tonne, just double
the amount that prevailed in England at that time. The com
pany also acquired several colliaries for steady supply of
coal from Ranigunj. It received water from the Damodar. The
Works got completed in 1877. In 1882 it was acquired by the
Government and renamed as Barakar Iron Works. First blast
furnace was started in January 1884, the second one was erec
ted in 1889 when the Works was again transferred to Bengal
Iron and Steel Company, an undertaking of M/s Martin and Com
pany, a private firm, that remodeled the Works.
KUMAON (U.P.)
Though enough was the supply of workable iron ore here,
attempts to commission Iron Works, failed to succeed.Follow
ing the recommendations of Sir Richard Strachey, Major Lt.
General, in 1857 the Government set up smelting Works at
Dechauri. In the same year·M/s Devis and Company was formed
in the Private Sector at Khurpatal for the said purpose. But
both the companies ended in smoke. In 1862 M/s Devis and Com
pany amalgamated with M/s Drummand and Company and North of
India. Resultantly, Kumaon Iron Works Company Ltd. did
evolve. By 1864 the company had to suspend its operations
for many a difficulty. Again in 1877 a final attempt was
made to renew the smelting operation but in vain.In addition,
attempts, made by many authorities including Tata to start
27
Iron Works at Chanda district and Indore, also yielded no
fruitful result.
DEVELOPMENT OF THE INDUSTRY IN THE 20TH CENTURY
The Bengal Iron and steel Company at Kulti, having two blast
furnaces in 1889, added a new one and its annual pig iron
capacity rose from 0.04 MT to 0.075 MT in the first decade.
About 1913 it installed its 4th furnace. By 1920 its produc
tion of pig iron was 500 tonnes per day. It also produced
fer~omanganese. Its output of coke-oven was about 96 thou
sand tonnes per annum (TPA). In deed, the modern age of Iron
and Steel Industry in India began to blossom with the birth
of Tiseo in 1907-08 at Sakchi, a small village in the dis
trict of Singbhum, Bihar with two blast furnaces of 200-TPA
capacity each. On 11.3.1918 Indian Iron and Steel Company
(liSCO) came into being under the managing agency of Burn
and Company at Hirapur .near Asansol (W.B.) with two blast
furnaces of 500-TPA each. Its each blast furnace capacity
was raised to 1800 TPA by 1930. In the meanwhile, in 1923
the Government of Myshore set up the Myshore Iron and Steel
Works (now VISL), the brain child of Sir Visvesvaraya28 ,the
grand old man of South India, at Benkipur (Bhadrabati) on
the bank of the Bhadra. It went into production in 1936 when
liSCO amalgamated with Bengal Iron and Steel Company.In 1937
the Steel Corporation of Bengal carne into existence under
the said managing agency of M/s Burn and Company for produ
cing steel from pig iron in liSCO with its Works at Burnpur
28
with an ingot capacity of 0.27 MTPA doubled later by adding
two basic Bassemer converters. In the First Plan (1951-56)
the Government of India decided to modernise the machinery
and to raise the existing plants to full capacity, viz, from
1 MTPA to 1.3 MTPA ingot steel for Tiseo, from 0.3 MTPA to
0.5 MTPA ingot steel for IISCO and to 0.1 MTPA finished
steel for VISL. In 1953 liSCO absorbed Steel Corporation of
Bengal. The Second Plan (1956-61), as noted earlier,aimed at
speedy industrialization laying first priority to Iron and
Steel Industry considering it to be the provider of tempo of
progress of the economy. Hence, the annual capacity of ingot
steel was augmented to 6 MT (TISCO - 2 MTPA, liSCO- 1 MTP;,,
Three proposed Public Sector Units-@ 1 MTPA each). There
fore, Hindustan Steel Ltd. (HSL) was formed under Public sec
tor with its head office at Ranchi in 1957 to manage the new
plants under Public Sector at Raurkella (RSP), Bhilai (BSP),
Durgapur (DSP) emerged in 1957. In 1960 an Alloy Steel Plant
{ASP) at Durgapur with a capacity of 0.048 MTPA was also ins
tituted. The Third Plan (1961-66) envisaged for stepping up
of the capacity to 10.2 MTPA and pig iron capacity to 1.5
MTPA. Bokaro Steel Ltd. (BSL) was brought into existence in
1964. During the three Annual Plans (1966-69) and the Fourth
Plan (1969-74) an expansion programme to cater to the growing
needs of steel was resorted to. Accordingly, the expansion
from 2.5 MTPA to 3.2 MTPA and again to 4.2 MTPA of BSP and
the completion of the first stage ingot capacity (1.7 MTPA)
and expansion to 2.5 MTPA by 1973-74 and later to 4 MTPA of
29
BSL were resolved. Apart from that, three new plants, Salem
Steel Plant (SSP), Visakapatnam Steel Plant (VSP) and Vijoy-
nagar Steel Plant were also committed to be erected under
Public sector. Steel Authority of India Ltd. (SAIL) sailed
in the ocean of Indian economy as a holding company of Pub-
lie Sector steel companies with authorised capital of ~.2000
crores in 1972-73. Incidentally it may be mentioned that I
National Council of Applied Economic Research(NCAER) sugges-
ted for enhancement of ingot capacity to 15 MTPA by 1981 to
29 cope with the ascending demands of the country • The actual
production of ingot steel in the Fourth Plan worked out to
only 8.8 MTPA as against the target of 14 MTPA. The target
of 2.2 MTPA for alloy steel was also not achieved. The Fifth
Plan (1974-79) further emphasised on the completion of expan-
sion programme of BSP and BSL to 4 MTPA each,erection of VSP,
SSP and Vijoynagar Steel Plant providing an outlay of ~.2237
crores for Public Sector Iron and Steel Industry.Actual pro-
duction of steel ingot amounted to only 7.4 MTPA as against
the target of 12 MTPA indicating a decline in the percentage
capacity utilisation of 6 integrated steel plants (BSP, DSP,
RSP, BSL, liSCO and TISCO) to 69. To combat the increasing
demand for steel from 8 MTPA to 12 MTPA in 1984-8S30,it was
resolved to raise and utilise the capacity of the Government
steel plants during the Sixth Plan (1980-85). The salient
programmes were to complete the expansion work of BSP and
BSL to 4 MTPA each, to commission VSP (with ingot capacity
of 3.25 MTPA in two stages) and Vijoy Nagar Steel Plant, to
boost up the ingot capacity of alloy steel from 0.1 MTPA to
30
1.6 MTPA and further to 2.6 MTPA, to produce 0.375 MTPA of
CRGO electrical and 0.036 MTPA of CRNGO steel sheet at RSP,
to arrange for a direct reduction of Pilot Plant with a
capacity of 10 tonnesper day using solid reductant in SAIL,
and the like. However, SSP went into trial and commercial
production in 1981 and 1982 respectively. The annual budget
allocation for 1984-85 was ~.1340.26 crores for Iron and
Steel Industry. Supply of steel was accelerating by only 5
per cent per annum, while demand for the same was galloping
by 9 per cent per annum. Under such circumstances,in an en
deavour to bridge up the gap, special attention was given t~
inter-alia, eradication of infrastructural deficiencies,such
as power shortage, non-availability of qualitative coal and
railway wagon, disturbed industrial relation etc.; import of
qualitative coal; provision for captive power plants;improve
ment in steel-making process to promote productivity; speedy
implementation of modernisation programmes; establishment of
VSP in particular. From this apart, the Government of India
initiated some measures to improve the capacity utilisation
and economic viability of the Mini Steel Plants. In fact,
during the Sixth Plan, the production in both the years 1982-
83 and 1983-84 suffered a set-back, which wai reversed in
1984-85 when production of steel ingots, salable steel and
finished steel rose by 4.6 per cent, 9.4 per cent and 7.1
per cent respectively in contrast to fall by 8.1 per cent,
12.3 per cent and 10.7 per cent respectively in 1983-84. In
the year 1984-85, 6 integrated plants produced (i) 6.997 MT
31
of salable steel as against the target of 7.09 MT showing an
increase in the capacity utilisation from 71.6 per cent to
78.3 per cent at the total rated capacity of 8.94 MT, (ii)
8.3 MT of ingot steel showing a rise in the capacity utili
sation from 68.6 per cent to 71.8 per cent. Again, 150 mini
plants with 3.94 MTPA capacity yielded 2.33 MT of carbon and
alloy steel, lower by 3.7 per cent than 2.42 MT produced in
1983-84. The production of rolled products led to 2.14 MT in
the year, higher by 15.7 per cent than 1.85 MT in 1983-84.In
short, the actual production of steel during the Sixth Plan
worked out to 8.8 MT against the target of 11.5 MT.
In the seventh Plan it was reiterated to utilise the poten
tiality of the existing plants through modernisation instead
of setting up of new ones. In 1985-86, 6 integrated steel
plants produced salable steel to the extent of 7.8 MT higher
by 11.1 per cent than 6.9 MT produced in 1984-85 and exceed
ed the target of 7.7 MT indicating a rise in average capaci
ty utilisation of the 6 plants from 78.3 per cent to 87.1
per cent, ingot steel to the extent of 9.06 MT higher by 9.2
per cent indicating an escalation in capacity utilisation
from 71.8 per cent to 78.4 per cent; 159 mini steel plants
with 4.5 MTPA capacity produced mild steel amounting tQ 2.57
MT higher by 10 per cent than that in the previous year due
to adequate scrap availability; import of smelting scrap and
sponge iron were being gea~ed up to raise scrap supply to
1.3 MTPA from 0.8 MTPA; five sponge iron plants and a Deve
lopment Council were also being set up; SAIL introduced a
32
scheme for timely supply of I and R coils/skelp, CR coils/
sheets, plates; the Department of Iron and Steel constituted
a scientific Advisory Committee to examine all technical as
pects in Steel Industry and to advise the Ministry of Iron
and Steel on policies of, and programmes for, development of
design and research in iron and steel process and production;
the noticable performance in technical aspect was reduction
in coal consumption rate of salable steel, increase in blast
furnace productivity, decline in energy consumption rate
leading to a saving of ~.26 crores per month in SAIL; the
union budget, it may, incidentally, be mentioned, provided a
sum of ~.925 crores for Iron and Steel Industry.
In 1986-87, 6 integrated plants produced 8.2 MT of salable
steel indicating a lower rate of growth by 5.7 per cent as
against 11.1 per cent in earlier year, 9.1 MT of ingot steel
indicating only a marginal rise of 0.3 per cent than that of
9.2 per cent in the previous year; however, the production
of finished steel dropped by 0.3 per cent as against a
brilliant growth of 9.6 per cent in the previous year:severe
power-cuts, oxygen shortage, fire in captive power plant,
machinery break-down were the major bottlenecks:the capacity
utilisation of salable steel of the said 6 plants rose margi
nally to 87.8 per cent; the stripper yard and additional
coil yard in connection with 4 MTPA expansion of BSL were
commissioned in November 1986. Pertinently, it merits men
tion here that India occupied 14th position 31 as against its
33
30th position in 1974 and 16th position in 1979, 1985 and
198632 in the world steel and pig iron production by produ
cing 1.7 per cent and 2.2 per cent of the total steel and
pig iron production respectively of the world and also held
4th position 33 in global iron ore production by producing
49.4 MT, i.e., 6 per cent of the total, in 1987.
In 1987-88, the production of salable steel of the said 6
plants amounted to 8.6 MT as compared to the target of 9.1
MT; ingot production of these plants also experienced a
short fall by 15 per cent of the target fixed, pointing out
a decline in average capacity utilisation to 69.5 per cent
from 78.4 per cent in the previous year; 160 mini units with
4.8 MTPA capacity produced 2.9 MT of carbon and alloy steel
and 3.41 MT of re-rolling products; the Scientific Advisory
Committee finalised a report on 'National Mission on Iron
and Steel' identifying 5 major areas for priority treatment
in the steel sector for intensive research and development;
National Mineral Development Corporation incorporated on
15.11.1958 raised the production of iron ore 34 by 12 times
that in 1950-51. Mention may be made that in 1988 India held
15th position by producing 14.3 MT of steel in the global
steel production schedule and also produced 52.3 MT of iron
ore as compared to global production of 969 MT 35 • During
1989-90, said 6 plants produced 10 MT and 8 MT of ingot and
salable steel respectively against 10.5 t1T and 9 .t-1T respec
tively in 1988-89 when commencement of modernisation scheme
34
in RSP and DSP was preceded by its completion in Tiseo. In
fact, the Seventh Plan estimated the demand for finished
steel to go up to 14 HT by 1989-90, to 18 MT oy 1994-95 and
again to 22 MT by 1999-2000. Accordingly, the Plan target
was 13 HTPA by 1989-90. This required the follow-up of the
steps stated earlier in a much more regorous, comprehensive
and coordinated effort involving modernisation, upgradation
of technologies, replacement of obsolete equipments, annihi
lation of technological imbalances and provision for balan
cing facilities. But nothing notable was accomplished, which
is apparent from the fact that actual production fell subs
tantially short of the target. However, at the begi~ing year
of the decade 90 , in 1990-91, the production of ingot and
salable steel amounted to 11 MT and 9.5 MT respectively.
Expansion programme to 4 MTPA of BSP and BSL kissed the com
pletion in the year.
The growth of the industry in the country vis-a-vis in the
world may be visualised at a glance from Table 1.10.
It emerges from the said Table that during 1950-90 the pro
duction of ingot steel grew by 7 times in India as against
4 times in the world; during 1960-90 the annual rated capa
city of the same progressed by 2.5 times in India as compar
ed to 2 times in the world. Yet, the production of ingot is
only about 1.5 per cent of the global total though the popu
lation of the country constitutes20 per cent or so of the
global total. Consequently, the per capita consumption of
35
TABLE 1.10
* CRUDE /INGOT PRODUCTION AND ANNUAL RATED CAPACITY OF IRON
AND STEEL INDUSTRY DURING 1950-90
(Figures in MT)
Production Annual Rated Capacity Year
** World India World India
1950-51 189.8 1.5 NA 1.5
1960-61 328.4 3.4 409 6.0
1970-71 594.0 6.6 656 8.9
1980-81 715.6 7.5 845 10.6
1988-89 779.6 10.8 NA NA
1989-90 NA 10.5 835 14.72
* Crude steel includes continuously cast semi-finished steel
** In respect of 6 integrated steel plants
Source: Compiled and computed from Statistics of Iron and
Steel Industry, op.cit., pp.391,392~& 3731 RBI Report on
CUrrency and Finance 1983-84, 1988-89, Vol.I; Economic
Survey - 1984-85; ARs of SAIL and TISCO.
steel in India is only about 15 Kg against 150 - 160 Kg,
the global average, and 500 - 600 Kg in developed nations.
A further insight into the Table provides that the annual
rated capacity of only 6 integrated steel plants in respect
of ingot steel in India advanced by 10 times during 1950-90.
In the context of the antiquity and ingenuity of the indus-
try in the country, the progress can seldom be regarded as
satisfactory. The poor production may be attributable to,
amongst others, poor capacity utilisation, infrastructural
bottlenecks, etc.
36
The nature of growth of production of steel and some other
related issues during recent years may be perused from Table
1.11.
Table 1.11 highlights that during 1978-90 the production of
ingot and salable steel rose from 8.4 MT and 6.7 MT to 10.7
MT and 9. 2 MT (~eluding the production of_ mini plants) res
pectively, the production capacity (of SAIL and TISCO only)
progressed from 9.8 MT and 7.5 MT to 14.9 MT and 11.8 MT
respectively. It may further be noted that percentage capa
city utilisation of ingot steel (of 6 integrated plants only)
during 1979-90 and of salable steel (of SAIL and TISCO only)
during 1981-87 led to, on an average, only 83 and 79 respec
tively, undoubtedly poor ones. One of the causes of poor
capacity utilisation may be low level of productivity in the
country, depicted in Table 1.12. As to foreign trade, it may
be marked that amount of import and export resulted in, on
an average, ~.1221 crores per annum and ~.553 crores per
annum respectively during 1983-88. Thus,the amount of import
was more than double that of export which, mention may be
made, includes export of iron ore. Most ironically, even in
the 1980s India was exporter of iron ore and importer of
iron and steel.
TABLE 1.11
GRO\vTH OF PRODUCTION, PRODUCTION CAPACITY, CAPACITY UTILISATION, FOREIGN TRADE AS TO IR0~·1
AND STEEL INDUSTRY IN INDIA DURING 1978-90 (Qnty in MT & Rs. in crores)
Year
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
Production : Production : % age capacity : ___ _:__ __ ~_caQc3.cit.y_ __ ~ utilisation ___ :
t t * t .-~- ** I * t Ingot ; Salable ; Ingot : Salable ! Ingot : Salable :
8.4
8.2
7.5
8.8
8.8
8.1
8.5
9.2
9.3
10.0
11.1
10.7
6.7
6.2
6.4
7.4
7.4
6.5
7.1
7.9
8.3
8. 7+
9.5+
9.2+
9.8
9.8
10.7
10.6
10.7
10.7
10.7
11.4
12.4
12.4
13.4 14.9@
.f_ ------- --- L___ --• ___ I
7.5
7.5
7.5
8.0
8.3
8.3
8.4
8.7
9.1
9.5
11.7 ®
11.8""
NA
77.0
76.0
84.5
80.0
83.5
82.0
83.0
81.0
89.0
92.0
88.0
69.0
NA
80.0
74.0
72.5
67.5
83.3
84.0
92.0
NA
NA
NA
*** Foreign Trade
Import
NA
NA
852
NA
NA
1049
941
1395
14 50
1269
NA
NA
~--•
Export
NA
NA
373
NA
NA
450
535
635
600
543
NA
NA
* Re. SAIL & TISCO only, ** Re. 6 integrated plants only, *** Re. Import of Iron & Steel and Export of Iron & Steel plus Iron Ore.
@ Includes VISL & excludes ASPs ..
+ Excludes production of mini plants about 3.2 MTPA.
source: Compiled and computed from ARs of SAIL & Tiseo (1978-90), of Department of Steel, op.cit. - 1986-87, p.30 & 1987-90 and Statistics of Iron & Steel Industry, op.cit., pp. -178, 367 & 368. w
...,_J
38
TABLE 1.12
LABOUR PRODUCTIVITY
(Tqnnes per man-year)
Year Country
1983 1984 1985 1986 1987
India 36 36 40 42 45
Japan 259
U.S.A. 356
ItalY 351
Luxamberg 308
ItalY 362
Source : Statistics of Iron and Steel Industry,op.cit.,p.419
It transpires from the analysis of Table 1.12 that the level
of labour productivity in India during 1983-87 was too poor
to be compared with that of the developed nations securing
highest positions in respective years.
So fa~ an overall picture of the evolution and growth of
Iron and Steel Industry in India has been portrayed.As pro
posed earlier, our onward stream of discussion now gets bi
furcated to deal with TISCO and SAIL separately. Firstly,
Tiseo is being taken up as historically it appeared before
SAIL.
EVOLUTION AND GROWTH OF THE TATA IRON AND STEEL COMPANY LTD.
The prolonged investigative procedure and expedition,mammoth
39
painstakings, indomitable and unfathomed spirit, patriotism
and sacrifice that lie behind the birth of TISCO deserve a
short enumeration. It is Jamsedji Nasserwanji Tata; Son of
N.Tata, a general merchanti born in 1839 in Navasari(Gujrat);
green scholared (graduated) in 1858 from Elphinstone College
(Bombay); adorned with insatiable thirst for knowledge, un-
common curiosity, enquiring attitude, observant mind; who
conducted and got flourished family business to enter the
markets in Far East and in England; secured experience in
trade, commerce at Hong Kong; set up a trading company in
1868; launched into a career in textiles upon a visit to
Manchestor and Lancashire; rejuvenated a ranshackle'Swadeshi'
Mill in Bombay in 1886 out of patriotism and persistently
dreameda dream of making India self-sufficient in Steel,
electric power, technical education, the three basic ingre-
dients for setting India industrially secured: foresaw with
an astonishing prescience that a necessary prelude to self-
Government was self-sufficiency and fathered TISCO early in
2oth t 36. I h' . . f cen ury • t was ~s conv~ct~on o furnishing the
basic industrial base of the nation that fired his imagina-
tion. With little encouragement from the then Government,
the pioneer had to set out on a lonely, untrodden path.
At first in 1882 he piloted a move to commission a steel
plant at Lohara, literally 'an iron village', on the report
of R.V.Schwartz, a German Geologist, stating that there were
considerable deposits of iron ore in the vicinity of Chanda
40
close to Nagpur (Maharastra) but failed to succeed for the
paucity of qualitative coal available from nearby Warara and
for deliberately framed strict mining regulations of the
Government to deber indigenous development. But he could not
be cowed. He painstakingly went on maintaining cuttings and
information on Indian minerals upto 1899 when Lord Curzon
liberalised mineral concession policy and Major R.H. Mohon
published an incisive report announcing that time had come
for India to make her own Iron and Steel Plant suggesting
Jharia coal fields as a possible source of fuel;Salem,Chanda
and Bengal as sources of iron ore. Impatient to make a start,
he secured support from George Hamilton, the then Secretary
of State for India and gathered knowledge about the coking
process at Birmingham and Albania and iron ore markets in
Cleaveland etc. and enlisted the services of J. Kennedy, a
partner of Kennedy Sahin and Company (Pittsburgh), the best
metallurgical engineering concern. In 1904 Dorabji Tata,Son
of J.N.Tata, s.saklatwala and C.M.Weld, an expert oeologist
and surveyor, deputed by C.P.Perin, a surveyor of interna
tion~l repute, contacted through J.Kennedy, held meticulous
investigation in Chanda and discovered the existence of mea
gre and too scattered iron deposits and limestone deposits
without complementary suitable coal deposits. This made them
disheartened.
Later, during a chance visit to the ~useum outside the Nag
pur Secretariat, Dorabji spotted dark patches on a geologi
cal map of the central provinces indicating the existence of
41
iron deposits in Durg, 224 K.M. from Nagpur. On climbing the
hills of Dhalli and Rajahara, Weld and Dorabji felt their
footsteps ring with a metallic sound which did not take them
long to feel that they were walking on one of the finest de-
posits of iron ore with an iron content of 67 per cent, i.e.,
3 per cent short of the maximum theoretical yield. But there
was no water here. So this endeavour was also fruitless. It
goes without saying that BSP has grown after fifty years in
this area. However, it was a letter from P.N. Bose, an un-
assuming Indian Geologist, intimating the existence of rich
deposits of iron ore in Mayurbhanj (Orissa) sounded attrac-
tive, because nearby there were limestone and coal fieldsof
Jharia and Ranigunj and support of Maharaja of Mayurbhanj.
Accordingly, Weld deputed Srinivas Rao to conduct a preli-
minary survey. On the latter's confirmation of Mr. Bose's
findings, Weld and Perin found in the majestic Gurumahisani
hill (in the dense forests) a veritable treasure of iron ore,
with an i.ron content of 60 per cent. For inaccessibility to
Gurumahisani, Sini was selected for the plant site but,again
lack of water stood in the way and eventually on 27.2.1908
the first stake was driven into the soil of Sakchi (now
Jamsedpur), a small village in Bihar, on the confluence of
SUbarnarekha and Kharkai near Kalimati Railway Station. The
dream had come alive but the dreamer had passed away at Bad
Nauheim (Germany) 4 years back in 1904. None the less, it of
was he who had conceived~the project and prepared the ground-
work bi exploring the field and choosing the experts.It was
42
his indomitable guiding spirit that inspired his successors
to complete the prodigious assignment.
Once the exhilaration of the discovery subsided, the sober
ing thought of raising finance took its place. The project
required a massive investment of about two million pounds
sterling. Indian investors were reluctant to put their money
in an uncertain scheme, foreign financiers demanded dispro
portionate control. But a nation-wide political movement in
1907, the 'Swadesh' feeling, exhorting each Indian to
assume responsibility for creating national resources posed
a congenial environment. Tatas issued shares on 26.8.1907,
their offices were besieged by enthuiastic supporters, 8000
subscriptions were received. For the first time in the finan
cial history of the country, the Indian people(ordinary folk),
the affluent and even the Maharajas had thronged to put up
the first truely Indian enterprise. Tata family had to con
tribute only 11 per cent of the total shares issued.Its for
mation was unique among such adventures,unique in its advan
tages and unique in its difficulties.Work on the plant began
in 1908. The next year saw the laying of the foundations of
the blast furnaces, steel furnaces, coke-ovens, power house
and machine shops. The company started with two 200-tonnes
blast furnaces, four 40-tonnes open hearth furnaces, 180
coppee coke-ovens, one steam-driven blooming mill, one rail
and structural mill and a small bar mill. Land for the site,
mines and quarries was acquired in 1910. Even the Government
43
did its bit by building a railway to Gurumahisani. The first
steel ingot was rolled on 16.2.1912, a momentous day in
Indian industrial history. The earlier years were beset with
the usual teething problems. Coal was not of uniform quality,
.••••. the original furnace designs were unsatisfactory,there
were dearth of skilled labour and trained technical personnel,
negative propaganda by foreign importers and Indian distri
butors of imported steel. Nevertheless, during the World War~
I the company supplied steel rails to Mesopotamia that play
ed an important role in the allied victories. The world-wide
post-war depression and slump fell on the company.Things got
so bad that it came on the verge of the Government-taking
over. However, people•s belief in the Tatas, staking of
Dorabji's personal assets worthing a crore of rupees to pro
secute with expansion programme, i.e., personal sacrifice on
the part of the family, not a single retrenchment coupled
with repayment of all debts even during the worst years -
together rescued the infant enterprise endowed with magni
ficent potentialities.
The company obtained its first colliery in 1910, adding 6
more in course of time along with several mines spread over
Bihar, Orissa, Karnataka. Tatas were one of the first to own
a fully mechanised iron ore mine in India at Noamundi. The
coal benefication plant at West Bokaro undertook benefica
tion of low-grade coals. The value of expansion programme of
Dorabji got appreciation during the dark days of the great
44
depression of 30s when the company was the supplier of nearly
three-fourths of the country's steel requirements which plac
ed it in a position of enviable authority. By the time of the
second world War, its production capacities had grown enough
to make its price lower than that of British Steel.World War
II saw the compelling presence of TISCO on the Indian indus
trial scene. Armoured cars fitted with bullet proof armour
plates and rivets produced by TISCO were popular and purpose
ful. The post-independence era changed the direction of its
expansion. It was set to participate in the herculean task
of nation building. The badly needed steel for the newly de
vised Five-Year Plan came from TISCO steel for Howrah Bridge,
Bhakra Nangal Project, o.v.c. Project, the Port at Kandla,
the City of Chandigarh and many more important projects. To
form a family of enterprises to process the steel of TISCO
into more advanced products many companies like Tata Agrico,
Tata Refractories etc. were brought into existence.Greatest
concentration of the company has been in the field of man
power development. It invested considerable amount of time,
money and resources in various training schemes.Accordingly,
in 1921 Jamsedpur Technical Institute was set up to develop
a pool of Indian technical personnel of TISCO as well as of
others, who could replace foreign experts in key positions.
Furnished with super-sophisticated labs,advanced training
aids and other infrastructural facilities, the Institute is
today one of the best in the country.Recently a new Manage
ment Development Centre has been built at Dimna to impart
45
advanced management training to middle and senior level mana
gers of the company. In pursuance of modernisation programme
ensued early in 80s, agreements were signed with Internatio
nal Finance Corporation, Washington on 30.10.80, with Lazard
Bros and Company Ltd., U.K. on 4.2.81 and with Joint Planning
Committee on 17.6.81 for loans of $ 38 million, £ 14 million
and ~.100 crores from SDF respectively. In 1981-82, the com
pany celebrated its platinum jubilee and received licences
for expansion of yearly capacity in alloy steel bearing rings
from 2 ml to 20.5 ml and for manufacturing 5.25 TPA of alloy
steel rings, annular forgings and florigs at an
cost of ~.21 crores to be completed by 1983-84.
estimated
The company
received clearance from the Government for the 2nd phase of
modernisation programme in 1982-83.The first phase got commi
ssioned in 1983-84 when the company initiated the effective
steps to implement phase II for expanding salable steel capa
city from 1.74 MTPA to 2.1 MTPA at an estimated cost of ~1127
crores and entered the agreement to purchase Metal Box India
Ltd., Kharagpur to diversify its products. In 1985-86, on
1.10.85 Indian Tube Company was merged with the company.
Current cost accounting system was introduced by the company
from this year. To execute the phase II, a foreign collabora
tion agreement with LURGIGMBH of West Germany for supply of
technical know-how and equipment for installation of second
sinter plant at Jamshedpur was entered, the rupee-cost was
proposed to be met from S.D.F. loan and foreign exchange of
DM 25 M from International Finance Corporation and DM 12 M
46
from SBI. The company entered into an agreement with Bihar
Government who agreed to lease the land at Jamshedpur for a
period of 100 years. In 1988-89 the phase II of modernisa-
tion programme got completely commissioned resulting in the
achievement and erection of (i) bar and rod mill, (ii) waste
re-cycling plant, (iii) raw material bedding and blending
yard, (iv) a second sinter plant, (v) coke-oven battery with
stamp charging facility (First in India), (vi) facilities at
the blast furnaces, steel melting shops and primary mills
and (vii) facilities for transport within the plant result-
ing in an increase in the salable steel capacity to 2.1 MTPA.
The Government further approved its increase to 2.7 MTPA in-
volving commissioning of 1 MT hot strip mill, a new blast
furnace. The company received a letter of intent for manu-
facture of 0.3 MTPA of ordinary port land cement and 1.43
MTPA of port land blast furnace slag cement at Nipania/
Sonadih in the district of Raipur (M.P.) and Jamshedpur res-
pectively at an estimated cost of ~.250 crores. As such for I
technical consultancy service agreements were signed with
Holtec, India and Holder Bank, Switzerland. The company•s
performance in terms of production and profit needs no exa-
ggeration. Its production, turnover, investment, energy con-
servation etc. were registering new records year after year
from inception to date barring a few exceptions. The com-
pany's growth in terms of production etc. during 1978-91
may be followed from Table 1.13.
Source : Compiled and computed from ARs of TISC01 ARs of Department of Steel, op.cit.,
1986-87, p.30 and 1987-89 And Statistics of Iron and Steel Industry, op.cit., p. 373. ~ -..J
48
An analysis of Table 1.13 helps substantiatUgthe statement
made earlier. The production, production capacity,percentage
capacity utilisation, profit and capital employed of the com
pany during 1978-91 grew considerably. It may not be out of
place to iterate that the company held a position around 46th
during 1985-88 in the global steel production schedule. In
fact, what has kept TISCO at the forefront of Indian indus-
trial scene is its ability to assess the needs of the future.
It has constantly recognised the need for rai~ing capacity,
absorbing technology and adapting to Indian conditions.
STEEL AUTHORITY OF INDIA LTD.
Upon a decision of the Government of India in December 1972,
SAIL emerged on 24.1.73 with its registered office in New
Delhi and authorised capital of ~.2000 crores as a holding
company under the Companies Act 1956, acquiring all the
shares of HSL and some others to discharge the following
b . ' 37 o JeCt1ves
(i) To plan, promote and organise an integrated and effi-
cient development of the Iron and Steel associated indus-
tries ••••• in accordance with the national economic policy
and objectives laid down by the Government from time to time;
(ii) To coordinate the activities of its subordinates, to
determine their economic and financial objectives,to review_
control ~
guide and direct their performances to secure
49
optimal utilisation of all resources placed at their disposal;
(iii) To act as an entrepreneur on behalf of the state to
identify new areas of economic investment and to undertake
or help in the undertaking of such investment;
(iv) To formulate and recommend to the Government a natio-
nal policy for the development of iron and steel and related
input industries and to advise it in all policies and tech-
nical matters.
For attaining the aforenoted objectives, SAIL has been stri-
ving hard and,of late,it has become the flagship of India's
Public Sector industry. 'It is the biggest corporate entity,
the largest steel-maker of the nation. It ranked first among
the 500 Non-USA companies in 1985-86, thirteenth among the
world's largest steel foundries during 1986-88, first among
the 221 Central PEs of the country in terms of investment
(equity plus loan) in 1987-88, fourth among the ten top PEs
of the country in terms of sales in 1987-88, first among the
engineering companies of the country during 1983-88, first
38 as employer and contributor to State EXchequer'. Mrs Indira
Gandhi aptly pointed out, 'The Public Sector Steel Industry
has made a significant contribution to India's Industrial
39 Development' • However, SAIL is composed of five integrated
steel plants with crude steel capacity of 11 MTPA- RSP,BSP,
DSP,BSL and liSCO (subsidiary); two alloy and special steel
plants - ASP and SSP; two special steel and ferro 3lloys
50
plants -- Maharastra Electrosmelt Ltd. (MEL) and VISL(subsi
diaries); 19 captive mines to provide iron ore, lime stone
and dolomite; a number of captive power plants to meet its
requirements to a great extent: a well equipped Research and
Development Centre for Iron and Steel: a Centre for Engineer
ing and Technology: a Management Training Institute and a
country-wide network of stockyard and distribution centres
spread over 49 locations organised by Central Marketing
Organisation, Calcutta. Besides, it provides modern township
and community facilities, schools and medical benefits to
2.3 lakhs direct employees and many others indirect.
The evolution and growth of SAIL may be enumerated in the
following lines.
EVOLUTION AND GROWTH OF SAIL
SAIL started its journey, it may be recalled, in 1972-73
(24.1.73) as a holding company of RSP, DSP, BSP,etc.,etc.,
the total investment of which was ~.1293.81 crores and pro
duction of hot metal, pig iron, ingot steel and salable
steel stood at 4.9 MT, 1.2 MT, 4.0 MT and 2.98 MT respec
tively at that time when it was decided that the Steel
Plants of Visakapatnam (VSP), Hospet, Salem would also be
carried on by SAIL, as and when formed. SAIL International
Ltd. came of as its subsidiary with an authorised capital of
~.50 lakhs on 10.6.74 with its head office in Calcutta to
canalise export and coordinate import and export of steel
51
goods. It exported steel goods to the extent of ~.110 crores
to Japan, Korea etc. in 1975-76 when VSP, Vijoynagar Steel
Plant and India Fire Bricks & Insulation Company Ltd.became
other subsidiaries of the company. This year, again, follow
ing the long-awaited restructuring of HSL -- RSP, BSP, DSP,
BSL etc., most of its existing subsidiaries, turned into
~IL's direct fully owned subsidiaries.In 1976-77 Kendrumukh
Iron Ore Company Ltd. was registered in terms of agreement
with Iran Government to sell 'iron ore concentrate' for a
loan of us $ 630 million. In March 1977, the project report
on SSP for production of 32,000 tonnes of rolled stainless
steel and strips in the first stage was approved by the
Government of India. In 1977-78 the first stage of develop
ment of BSL was completed, an agreement with France for
supply of technical know-how for cold rolling mill of SSP
was entered into. In 1978-79, following the enactment of the
Public Sector Iron. and Steel Companies (Restructuring and
Misc. Provisions) Act, SAIL was converted into a full-fledged
operational company, its subsidiaries turned into its units/
divisions, IISCO was enrolled as a new subsidiary,its capi
tal employed consisting of net~block and working capital
moved up to ~.1803.39 crores, while the production of the
said items geared upto 6.8 MT, 1.4 MT, 5.7 MT and 4.6 MT
respectively. In the following year the company availed it
self of loan from Steel Development Fund created in 1978,
VSP with 3.4 MTPA capacity secured Government's approval. In
1980-81 Paradeep Steel Project, Calcutta was taken over, the
52
company started receiving public deposits and experienced an
unprecedented loss of ~.99.64 crores (net) due to reconstruc-
tion. In the subsequent year VSP, Vijoynagar and Paradeep
Steel Plants were transferred to the direct control of the
Ministry of Steel and M.ines, Government of India; SSP went
into production; the capital employed increased to ~.2823.69
crores. In 1982-83 the company sustained loss of ~.105.77
crores which enhanced further to ~.214.61 crores in the next
year when the company celebrated the Silver Jubilee in res-
pect of RSP and BSP. At the end of the Sixth Plan (1984-85),
the capital employed worked out to ~.3699.83 crores, more
than twice the amount that was in 1978-79. Though the pro-
duction ·of ingot and salable steel accelerated to 5.8 MT and
4.9 MT respectively, that of hot metal and pig iron declined
to 6.7 MT and 1.0 MT respectively. In 1985-86 the company
earned net profit of ~.159.05 crores highest ever since 1978-
79. The phase I of 4 MT expansion programme of BSP got com-
pleted in the year. MEL became a subsidiary of the company
in 1986-87 when the self-financing for expansion was started
and greater recognition to corporate planning was given by
adopting a long-range plan upto 2000 A.D., which aimed at
building up and optimal utilisation of production capacity,
modernisation of plants, adoption of new technologies,marke-
ting strategy, manpower and resource planning, enhancing the
salable steel capacity to 15 MTPA by the end of this century
. 1 . . 1 1 40 . lnvo vlng caplta out ay of ~.15,254 crores . Accordlngly,
MOU between the Government of India and SAIL, the stepping
53
-------------------------------------------------------------------------stone to achieve the go'aL was negotiated and signed. In
1988-89, the net profit exceeded the previous highest and
led to ~.273.64 crores enabling the company thereby to wipe
off all past accumulated los~es, capital employed stood at
~.5985.39 crores, substantial reduction in the dependence on
public utility power supplies from 67 per cent to 45 per cent
and better energy conservation figured most, all units of
captive plants in BSL, DSP and RSP were commissioned, the
long-awaited modernisation scheme to be executed in _two pha
ses set in at DSP and RSP. Incidentally, under phase I,back
log of maintenance would be cleared, old equipments would be
revamped, technology would be upgraded, energy conservation
levels would be raised and the quality of inputs and outputs
would be improved, while under the phase II, level of output
in each plant would be optimised. In 1989-90,with the termi
nation of the Seventh Plan, the capital employed rose to
~.6715.70 crores, i.e., about 4 times that in 1978-79. How
ever, the production of hot metal, ingot steel and salable
steel augmented substantially to 9.0 MT, 7.9 MT and 6.7 MT
respectively, while that of pig iron dra.stically dropped to
0.9 MT as against that mentioned earlier in 1984-85. In the
year V1SL became its another subsidiary, the company recorded
a highest ever turnover of ~.7,420 crores, capital expendi
tu:e of Rs.ll43.91 crores. In 1990-91, the beginningyear of the
decade '90 and closing year of the present stud},the company
witnessed a very fine performance adjudged 'very good' under
the various parameters of I10U. In the year the company's
54
gross turnover crossed the cross mark of ~.8,000 crores by
~.184.10 crores; the company also attained gross margin of
~.1210 crores, workman-power productivity at 77 ingot tonnes
per man-year and incurred capital expenditure of. ~.1346.66
crores, all of which recorded highest during the life time
of the company: its capital employed, profit,export of steel
amounted to ~.7223.38 crores, ~.244.69 crores and ~.125 ere
res respectively: modernisation work at DSP~-RSP
was well in progress; the 4 MT stage of BSL and BSP and the
phase II expansion of SSP marked the completion:the exercise
for corporate plan upto 2005 A.D. was initiated.In fact,each
integrated plant improved both financially and technically
and saved ~.45 crores in production cost, energy consumption
per tonne of ingot steel output reduced to 9.55 G.C. from
9.77 G.C., production capacity utilisation rose by 4 per cent
to 84 per cent in the year when the yearly production of hot
metal, ingot steel and salable steel arrived at 9.1 MT, 8.4
MT and 7.0 MT respectively as against 0.77 MT, 0~16 MT and
0.063 MT in 1959-60.
The allocation of outlay in Public Sector Steel and the
growth of annual rated capacity thereof during Plan periods
ventilated through Table 1.14 were quite conspicuous.
From a panaromic view of.Table 1.14 it transpires that the
annual rated crude steel capacity in PEs improved from zero
HTPA in the First Plan to 12.4 MTPA in the Seventh Plan. In
respect of allocation of outlay it would be noted that Plan
TABLE 1.14
SHARE OF STEEL IN PUBLIC SECTOR IN 5 YEAR-PLAN OUTLAYS AND GROWTH OF CRUDE STEEL CAPACITY AT
FIVE INTEGRATED STEEL PLANTS
Plan
1
1st
2nd
3rd
4th
5th
6th
7th
Total
(~. in crores and capacity in MT) I I r --·------------ I
: : : : Percentage allocation : : Total : Outlay : Outlay in : 1 , :
: Allocation : in PEs : PE Steel : PE to : PE Steel : PE Steel : : : : ! Total : to Total : to PE : J I J __ l_ _ __ L _ ____L _______ ____L I I -~------ I I ------ - i -~-- - I -I
Annual rated
capacity
: 2 : 3 : 4 : 3.:.2=5 : 4.:.2=6 : 4.:.3=7 : 8 I I I t • _ _t_ --~--- •
3760
7720
12671
24759
67145
172210
348148
6 36413
1960
4672
8577
1577 9
40097
97500
180000
348585
33
350
670
1121
2237
4000
6420
14831
52.13
60.52
67.69
63.73
59.72
56.62
51.70
54.77
0.88
4.53
5.29
4.53
3.33
2.32
1.84
2.33
1.68
7.49 3.0
7.81 5.9
7.10 6.9
5.58 8.6
4.10 9.4
* 3.57 12.4
4.25
* (+) 1.5 Vizag (expected)
Source : Statistics of Iron and Steel Industry, op.cit., p.373. lJl lJl
56
outlay in Public Sector Steel varied between ~.33 crores in
the First Plan and ~.6420 crores in the Seventh Plan. Again,
the percentage of allocation of outlay in Public Sector Steel
to total of Public Sector outlay ranged between 1.68 in the
First Plan and 7.81 in the Third Plan, while that to total
outlay varied from 0.88 in the First Plan to 5.29 in the
Third Plan. Thus, PE steel enjoyed, during the Seven Plan
periods, on an average, 4.25 per cent and 2.33 per cent of
total PE outlay and of overall outlay respectively.
The company incurred vast capital expenditure during the Plan
periods. It may be examined from Table 1.15.
Table 1.15 projects that during the period 1951-90 the total
capital expenditure of the company in respect of its 4 inte
grated plants only worked out to ~.9959 crores. 67 per cent,
2 per cent, 16 per cent and 15 per cent thereof were channe
lised for increasing capacity, diversification, updating
technology and additions etc. respectively.
The nature of outlay in SAIL may, pertinently, be examined
from Table 1.16.
Table 1.16 highlights that the approved outlay in the company
fell short of anticipated expenditure during the Seventh Plan
by ~.279.53 crores and ~.364.05 crores in case of'exclusive
of subsidiaries'and'inclusive of subsidiaries'respectively.
57
TABLE 1.15
CAPITAL EXPENDITURE OF SAIL'S INTEGRATED STEEL PLANTS (SAVE
liSCO) DURING PLAN PERIODS (1951-90)
(Rs. in crores)
Capital Expenditure On
Plan
1st
2nd
3rd
3 Annual Plans
4th
5th
1 Annual Plan
6th
7th **
Total
Percentage to total
I
• • Increa- •
i :Diversi-s ng • fi .
it , cat~on capac y,
04
575
348
266
783
1166
321
1755
1396
6614
67
1
37
38
132
29
237
2
***
* Including townships
I I
, !Additions! :updating !/Modifi:the tech-!cations/ :nology :Replace-
292
1302
1594
16
!ments*
****
1
11
17
63
150
66
344
862
1514
15
Total
04
576
359
283
847
1353
425
2 523
3589
9959
100
** Includes actuals till 1988-89 and revised estimates for
***
****
1989-90
Includes Silicon Steel Project of R.S.P.
Includes Captive Power Plants and modernisation of DSP & RSP
Source : Statistics of Iron and Steel Industry, op.cit., p.374.
58
TABLE 1.16
OUTLAY IN SAIL DURING SEVENTH PLAN
(Rs. in crores) I
;outlay I I Revised Anticipated
Coverage !approved by Actuals~ estimate Expenditure :Planning 1985-89: 1989-90 for 7th Plan :corrunission
1 2 3 4 3+4 = 5
SAIL (Exclusive of 3309.30 2346.14 1242.69 3588.83 Sub~idiaries)
. SAIL (Inclusive of
3575.68 2565.97 1373.76 3939.73 Subsidiaries)
Source Stati~tics of Iron and Steel Industry,op.cit.,p.377.
So fa~ a lot of discussion about SAIL in rem have been held.
Now, it does logically follow to take its individual Plants
into account in a nutshell.
RAURKELA STEEL PLANT
RsP came into existence in 1957 under the collaboration of
Kroops Demag, a German company, in the Public Sector with
ingot capacity of 1 MTPA, 40,000 employees, on the basis of
iron ore of Keyonjhar and Mayurbhanj, coal of Talcher and
Jharia, hydro-electricity of Hirakud, local manganese, lime
~tone and dolomite, in Orissa. It is the first of its kind
and has since been pioneering programme of attaining self-
reliance in steel production. It may be recalled that it
59
was shifted from HSL to SAIL in 1972-73. It is the first in
India.to produce flat products and in Asia to introduce BOF
process and one amongst a few to adopt the LD converter pro-~
cess. It produces a wide range of products, viz., hot and
cold rolled coils/sheets, galvanised sheets, electrolytic
tin plates and sw & ERW pipes. Continuous technological inno-
vations led to greater diversification of its product range.
A sophisticated silicon steel project was commissioned in
1988-89 to produce CRNG-oriented sheets. A singular feature
of the plant is its fertiliser plant rated to produce 0.46
MTPA of CAN (25% N2). The modernisation programme approved
in October 1989, due to be completed in two phases by 1995,
involving an investment of ~.2461 crores would enhance the
plant's ingot capacity to 1.9 MT. Phase I packages were well
.in progress, while under phase II orders for 11 indigenous
packages were finalised and 4 indigenous and 5 global pack-
ages were under evaluation.
The nature of production, etc. of the plant may be grasped
from Table 1.17.
It appears from Table 1.17 that during 1980-91 the produc-
tion of ingot and salable steel ranged between 1.088 MT,
0.862 MT respectively in 198 3-84 and 1. 246 HT in 1990-91,
1.168 MT in 1988-89 respectively, while percentage capacity
utilisation ranged between 60 and 68 in 1983-84 and in 1990-
91 respectively and working results varied from (-) ~.100.32
crores in 1983 - 84 to ~.98.93 crores in 1988-89, which may
be identified as poor.
60
TABLE 1.17
PRODUCTION, PERCENTAGE CAPACITY UTILISATION AND WORKING
RESULTS OF RSP DURING 1980-91
Year Production Ingot roage: Working {MT) capacity Results
utili sa- {Rs. in Ingot Salable tion crores) Steel Steel
1980-81 1.165 0.985 65 13.97
1981-82 1.203 1.090 67 21.71
19.82-83 1.144 0.992 64 74.99
1983-84 1.088 0.862 60 - 100.32
1984-85 1.119 1.013 62 27.10
1985-86 1.180 1.004 65 33.62
1986-87 1.100 1.140 60 11.13
1987-88 1.115 1.156 62 15.02
1988-89 1.190 1.168 66 98.93
1989-90 1.170 1.111 65 55.05
1990-91 1.246 1.082 68 43.00
Source : (i) ARs of SAIL, Statistics of Iron and Steel
Industry, op.cit., RBI Report on Currency and Finance, Vol.!,
Economic Review, 1979-80, 1984-87 -- For production and work-
ing Results.
(ii) AR of Department of Steel, op.cit., 1986-87,
p.30 -- For capicity utilisation for the period 1980-87;
ARs of SAIL -- For capicity utilisation for 1987-91 --
Results compiled and computed.
61
It may, pertinently, be noted that the Seventh Plan outlay . for the unit approved by Planning Commission worked out to
~.574.20 crores, while the anticipated expenditure was
~.474.59 crores and as such, allocation for new schemes etc.
41 exceeded that for continuing schemes , while the proposed
investment for the unit for 1991-2000 was also totally for
42 new schemes •
BHILAI STEEL PLANT -It was set up in 1957 under Public Sector in Madhyapradesh
under Russian collaboration with an ingot capacity of 1 MTPA
and 64,000 employees. It was also shifted from HSL to SAIL
in 1972-73. Its salable capacity increased from 1.965 MTPA
to 3.153 MTPA. Its first blast furnace was installed on
4.2.59. The stream has LD process of steel~making continu-/
ous casting of slabs and blooms, and a 3600 MM-wide plate /
mill, one of the biggest of its kind in Asia.The old stream
specialises in shapped products, mostly sections, merchant
product, wire rods and heavy rail. The versatile rail mill
in this plant is capable of producing rails to meet the most
stringent specifications required by the users.The plant has
been one of the largest exporters of steel products, parti-
cularly rails in the country.
In the earlier period the plant had been gradually becoming
the short significant producer of steel. But, since 1969-70
it made a tremendous progress in capacity utilisation. In
62
.. 1974-75 the Government of India approved the expansion to 4
MT capacity which got completed in 1990-91 with the commiss
ioning of (i) blast furnace no. 7 with bell-less top charg
ing system and computerised control, the first in India;
(ii) 7 meter high coke-oven battery no. 9, the tallest in
India; (iii) VAD in convertership; etc. Modern continuous
casting process, the first time in the Public Sector, was
also adopted here. MECON prepared the detailed project re-
port for the said expansion. The studies were being made for
furtherance of its capacity to 5.3 MTPA. The 2nd sintering
plant was also set up to use the additional amount of iron
ore expected from the Dalli mechanised mines.
The nature of production, etc. of the unit during 1980-91
may be examined from Table 1.18.
From a panaromic view of Table 1.18 it becomes evident that
during 1980-91 the production, working results and percen-
tage capacity utilisation of the unit did improve. Again,as
compared to RSP, its performance was really better during
the period under reference.
Mention may be made that the Seventh Plan outlay of ~.906.33
crores differed from the anticipated expenditure of ~1077.19
crores of the plant, again major allocations were channelis-
d f . t' i 43 h'l d . tm t e or lts con lnu ng schemes , w l e propose lnves en
for 1991-2000 was absolutely directed towards its new schem-44
es
63
TABLE 1.18
PRODUCTION, PERCENTAGE CAPACITY UTILISATION AND WORKiljG
RESULTS OF BSP DURING 1980-91
• I
Production I • • • Ingot %age • Working • (MT) • • • • capacity • Results Year I • • I I • utilisa- I (Rs. in • Ingot • Salable I • I • I tion crores) I steel • Steel I • • •
1980-81 2.04 1.81 82 17.84
1981-82 2.12 1.82 85 66.09
1982-83 2.13 1.84 85 19.95
* 1983-84 1.84 1. 58 73 2.83
* 1984-85 2.00 1.81 77 49.27
* 1985-86 2.35 2.06 76 64.39
1986-87 2.23 2.15 63 38.67
1987-88 2.47 2.17 62 30.21
1988-89 3.07 2.54 78 66.52
1989-90 3.25 2.59 81 72.22
1990-91 3.51 2.79 84 104.00
* With respect to 2.5 MT stage capacity
Source : Ibid.
DURGAPUR STEEL PLANT
It was also commissioned in 1957 in Public Sector under
departmental organisation in Durgapur with ingot capacity of
1 MTPA under collaboration of ISCON, a British company, on
the strength of coal of Raniganj, iron ore and manganese of
64
Orissa, water of the Damodar. Its production started in 1962.
To call up, it also became a unit of SAIL simultaneously with
RSP and BSP. It is a major producer of railway products like
wheels, axles, fish plates, sleepers. It also produces light
and medium sections, merchant sections and skelps.In 1978-79
a number of schemes were taken up to diversify and improve
its products. Government's approval to. an outlay of ~.25 ere
res to finance the selection of technologies, preparation of
basic and detailed engineering designs and finalisation of
equipment specifications was accorded in Octobe~ 1984. Its
modernisation, to augment ingot capacity to 1.9 MT,scheduled
to be carried out through 16 turn·key-packages within Syears
with MECON as the prime consultant, started in 1988-89 along
with that of RSP. The backlog of maintenance and obsolescence
affected its performance for a long time.However,the Govern
ment of India approved the definitive cost estimation of
~.2667.6 crores in February, 1989 to revamp and technologi
cally upgrade the plant through modernisation. Orders were
placed for all the 6 global and 8 out of 10 indegeneous pack
ages by 1988-89. The modernisation programme of the plant,
however, was in solid progress. Basic engineering for major
shops was completed and civil works including piling and
concreting started by 1989-90 and was in advanced stage of
completion in 1990-91.
The production, etc. of the plant for the period 1980-91
were quite unsatisfactory. To substantiate, Table 1.19 may
be followed.
65
TABLE 1.19
PRODUCTION, PERCENTAGE CAPACITY UTILISATION AND WOE!<ING
RESULTS OF DSP DURING 1980-91
Production I
Ingot %age I Working (MT) I I
I capacity I Results Year I •
1 • utili sa- I (Rs. in Ingot I Salable I I
I • tion I crores) Steel I Steel I • • I I
I
1980-81 0.741 0.598 46 8.44
1981-82 0.930 0.782 58 0.70
1982-83 0.952' 0.812 60 - 44.23
1983-84 0.806 0.602 50 - 63.72
1984-85 0.760 0.621 48 - 53.36
1985-86 0.880 0.724 55 - 26.52
1986-87 0.922 o. 751 57 - 22.45
1987-88 0.936 0.836 59 - 54.75
1988-89 0.956 0.832 59 - 77.22
1989-90 0.850 0.700 53 - 93.38
1990-91 0.871 0.731 48 - 88.06
Source : Ibid.
Table 1.19 reveals that the plant's production of ingot and
salable steel was on the wane, percentage capacity utilisa-
tion was around 50 and working results were negative in all
the years but one during 1980-91. Incidentally, it des~ves
mention that the seventh Plan outlay for the plant of
~.688.03 crores approved by the Planning Commission ran
66
short of the anticipated expenditure by ~.157.81 crores,
again the expenditure on new schemes prevailed over that of
45 continuing schemes • Moreover, the proposed investment for
46 1991-2000 was totally for new schemes ~
BOKARO STEEL PLANT (Formerly Bokaro Steel Ltd.)
BSL was erected in 1964 under the collaboration of USSR in
the Public Sector on the basis of iron ore of Singbhum,coal
of Bokaro and water of the Damodar with an ingot capacity
of 1.7 MTPA and salable capacity of 1.3 MTPA and pig iron
capacity of 0.88 MTPA.
In fact, it heralds India's progress in the design, engin-
eering and construction of steel plants. It is the first
indigenous Public Sector Steel Plant in India. However,it
made a profit of ~.1.76 crores in 1976-77 for the first
time. It was also brought under SAIL. It produces flat pro-
ducts. Its expansion programme to 4 MT stage was taken up
after 1970 and completed in 1990-91. Soviet side submitted
the DPR in regard to modernisation of its converter shops
and hot strip mills. The investment proposal was under pro-
cess for Government approval. Benefits envisaged may be
summed up as under :
i. Liquid steel production would rise from 4.08 MTPA to
4.5 MTPA.
ii. Increase in production of slabs by 0.86 MTPA by
67
introduction of continuous casting process and increase in
salable steel by 0.84 MTPA.
iii. Savings in energy by elimination of slabbing mill. The
total project was expected to be completed in 4¥2 years after
signing the contract and would be executed by Soviet on a
total 'turnkey' basis. Incidentally, it started production
early in 70s. The performance of the plant may be pursued
from Table 1.20.
TABLE 1.20
PRODUCTION, PERCENTAGE CAPACITY UTILIZATION AND WORKING
RESULTS OF BSL DURING 1980-91
• Production I I I :Ingot %age: Working • {MT) I :capacity Results Year • • :utilisa- {Rs. in • Ingot Salable I :tion crores) I Steel Steel I
1980-81 0.923 0.844 37 17.30
1981-82 1.792 1.472 72 6.54
1982-83 1.829 1.529 73 18.09
1983-84 1.681 1.288 67 0.55
1984-85 1.925 1.459 77 11.47
1985-86 2.003 1.720 80 112.93 1986-87 2.056 1. 745 64 125.17 1987-88 2.418 1.968 60 171.21 1988-89 2.771 2.277 69 299.56 1989-90 2.654 2.325 66 253.82 1990-91 2.813 2.441 72 180.00
Source . Ibid. .
68
It may be observed from Table 1.20 that the plant's produc-
tion, capacity utilisation, working results during 1980-91
were showing increasing trend. Incidentally, the plant's
eXpenditure on different schemes during 1985-89 led to
~.664.85 crores, revised estimate thereof for 1989-90 worked
out to ~.175.63 crores as against outlays of ~.774.01 crores
for 1985-90 where continuing schemes dominated the new sche-47 .
mes • But the proposed investment for 1991-2000 was totally
48 for new schemes •
ALLOY STEEL PLANT
The plant was instituted at Durgapur in 1960 under Japanese
collaboration with ingot capacity of 0.1 MTPA and 7400 peo
ple. Beingthelargest of its kind in the country it went thro-, ugh two expansion stages completed in 1980-81 and March 1988
respectively. The completion of 1st stage augmented the ingot
capacity to 0.16 MTPA and salable steel capacity to 0.103
MTPA involving a cost of ~.9.3 crores. The completion of 2nd
stage enhanced the capacity (ingot) further to 0.26 MTPA
attracting an expenditure of 113.25 crores leading to updat-
ing of technology; improvement in utility; a provision for
hot rolled barrels for SSP; installation of a continuous
slab/bloom casting machine; a VOD unit and a VAD unit -- each
of 60 tonnes capacity. The plant produces, inter-alia,armour
plate grade steel, many special grade alloys,forged products,
bars, steels and rods. The nature of production, etc. of the
69
plant during 1980-91 appears as under :
TABLE 1.21
PRODUCTION, PERCENTAGE CAPACITY UTILISATION AND WORKING
RESULTS OF ASP DURING 1980-91
• Production • Ingot 'Yoage • Working
(MT) I
capacity I Results Year I I uti lisa- I (Rs. in
Ingot I Salable I I tion I crores)
Steel I Steel I I I
1980-81 0.071 0.042 70 4.52
1981-82 0.086 0.052 86 6.64
1982-83 0.081 0.047 51 - 15.31
1983-84 0.067 0.044 67 - 33.75
1984-85 0.085 0.059 85 - 30.02
1985-86 0.101 0.060 63 - 28.30
1986-87 0.134 0.082 82 - 25.72
1987-88 0.145 0.089 70 - 39.98
1988-89 0.152 0.107 82 - 31.21
1989-90 NA 0.126 NA - 36.68
1990-91 NA 0.130 NA 9.00
Source . Ibid. .
It is conceivable from Table 1.21 that the plant's produc-
tion and percentage capacity utilisation tended to rise but
the working results were negative all along during 1980-91.
Incidentally, during Seventh Plan the anticipated expenditure
of ~.96.20 crores of the plant exceeded the outlay approved
70
marginally by about ~.2 crores and the emphasis on continu-
49 ing scheme was greater than that on the others , while
greater emphasis on the latter was given in the proposed in-
50 vestments for the period 1995-2000 •
SALEM STEEL PLANT
Situated in Tamil Nadu, SSP represents dispersal of indus-
tries and balanced regional development, brings India the
latest sophistication in cold rolling. It went into produc
tion early in 80s. It was designed to roll out 0.032 MTPA of
cold rolled stainless steel strips and wide sheets in the
first stage. Lignite coal of Neveli, local iron ore, lime
stone'and dolomite helped a lot to set up the plant.DPR en-
visaged production of 0.22 MTPA of stainless, electrical and
other special steel in the second stage of expansion. The
second sendzimir installed in 1990-91 raised its capacity to
0.07 MTPA. For indigenisation of hot bands,its primary feed
material, a comprehensive backward integration programme was
being implemented. As such, a switch over from the imported
hot band to the hot band rolled at BSL and RSP,out of slabs
made at ASP was being resorted to. It can produce stainless
steel to mirror finish. So the plant has established a high
reputation for quality products acclaimed by international
markets also. Its stainless steel finds application in many
industries -- Nuclear Petrolium, Chemicals, Fertiliser, Cut-
lery, Dairy, etc. The plant is actively pursuing development
71
activities to promote use of stainless steel in new areas,
such as coinage, railway coaches, buildings, architecture,
etc. In fact, during its only 10 years of operation it be
came a symbol of excellence within and without the country.
The plant's state of production, etc. may be comprehended
from Table 1.22.
TABLE 1.22
PRODUCTION, PERCENTAGE CAPACITY UTILISATION AND WORKING
RESULTS OF SSP DURING 1981-91
I I Working I Percentage I
Production I I Results Year I capacity I
{Tonnes) • • (Rs • in • utilisation I I • crores) • I
1981-82 3214 23 - 13 .oo
1982-83 6244 25 - 14.21
1983-84 6320 23 - 18.08
1984-85 17139 63 0.53
1985-86 24360 94 2.92
1986-87 26600 108 2.92
1987-88 31000 NA 3.91
1988-89 34000 NA 10.17
1989-90 40120 NA - 25.63
1990-91 52757 NA 20.00
source . Ibid. .
A scrutiny of Table 1.22 holds out that the plant's produc-
tion, percentage capacity utilisation improved but its
72
working results were quite gruesome during the period under
reference. By the by, the anticipated expenditure of ~.52
crores for the unit was far greater than the approved outlay
by about ~.36 crores and continuing schemes bagged less allo
cation than the others during the Seventh Plan51
•
INDIAN IRON & STEEL COMPANY
liSCO was established at Hirapur near Asansol (W.B.} in 1918
in Private sector to produce long products under the manag-
ing agency of Burn and Company on the strength of iron ore
of Gua at south Singbhum, Bihar, Bagiaburu (Keyonjhar dis
trict), Gurumahisani, Sulaipat, Badamhill, Bonai hill all of
Orissa, coal of Raniganj, water of the Damodar, manganese of
Mayurbhanj {Orissa) with two blast furnaces of 500 TPA ingot
capacity each. The Bengal Iron and Steel Company formed in
1874 and Steel Corporation of Bengal formed in 1937 were
amalgamated and merged with liSCO in 1936 and 1953 respec-
tively making liSCO an integrated steel plant. In view of
gradual deterioration of the plant, Government of India took
over its management on 14.7.72 for two years later extended
upto three years. A ten year capital reconstruction and re-
habilitation scheme was launched to hold production at rated
level and to rejuvenate its technical health. In 1976, 57.33
per cent of equity capital and 57.37 per cent of preference
capital were acquired by the Central Government:IISCO Acqui
sition of Shares Aci was passed. On 1.5.78 the acquired
73
shares were transferred to SAIL making IISCO a subsidiary of
SAIL. Subsequently, on 30.3.79 the rest of its shares were
also transferred to SAIL, thereby making it a wholly owned
subsidiary of SAIL. On 31.3.79 its authorised and paid-up
capitals were ~.100 crores and ~.54.32 crores respectively.
The plant is regarded as one where the foundation of the
modern Steel Industry in the country was laid. Its moderni-
sation proposal was approved, in principle, by the Govern-
ment in 1987-88 and ~.30 crores was sanctioned on this score
for preparation of DPR and enabling works which were in pro-
gress. With the completion of modernisation programme, prac
tically, a new plant would come up raising its ingot capa
city to 2.15 MTPA with the latest state-of-art technology.
The plant's performance in terms of production,etc. may be
viewed from Table 1.23.
Table 1.23 ventilates that the company had been continuously
on the red, its production and percentage capacity utilisa-
tion dropped severely during 1980-91. However, during the
Seventh Plan the anticipated expenditure of ~.340.20 crores
of the company outweighed the approved outlays by a meagre
amount of ~.128.06 crores,· expenditure on continuing schemes, 52 again, dominated the other ones • But the proposed invest-
ments for 1991-2000 were all for new schemes 53 •
74
TABLE 1.23
PRODUCTION, PERCENTAGE CAPACITY UTILISATION AND WORKING
RESULTS DURING 1980~91 OF IISCO
Year
1980-81
1981-82
1982-83
1983-84
1984-8 5
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
Production ('000 tonnes)
Ingot Steel
609
600
624
543
444
565
528
545
465
341
323
Salable Steel
523
488
500
444
380
500
526
542
442
333
327
Ingot %age capacity utilisation
61
60
62
54
44
56
51
54
56
34
33
*After prior period adjustment.& write back
Source : Compiled & computed from ARs of :
i. SAIL 1984-85, p.136.
ii. IISCO 1989-90, pp.55,57,64.
iii. Department of Steel, op.cit., 1986-87, p.30.
iv. Anandabazar Patrika dated 2.4.91.
Working* Results (Rs. in crores)
NA
NA
69.70
23.06
81.40
60.99
81.91
- 115.75
- 119.55
- 138.08
NA
... R ~ '
75
VISVESVARYA IRON AND STEEL LTD.
VISL came into existence as Mysore Iron & Steel Works in 1923
as a departmental organisation of Karnataka State Government
at Benkipur (now Bhadrabati) on the bank of the Vedra near
Simoga with a small furnace based on charcoal with pig iron
capacity of 24,5000 MTPA on the strength of iron ore (Haema
tite) of Komman Gundi at Bababudan Hill, dolomite of Sankar
goda (Simoga), hydroelectric power of Jog area. The absence
of-charcoal posed a serious problem. A small Steel Plant and
some steel rolling mills were added in 1936. The plant was
modernised in the First Plan. Ferro-silicon was produced by
using mild steel in the plant in 1971-72 for the first time
in India. In 1976 the plant was renamed after Sir Visvesvarya,
the grand old man of the South, as Visvesvarya Iron and Steel
Ltd. jointly owned by the State and Central Government in 3:2
ratio through SAIL. It is one of the principal producers of
alloy and special steel in India. Its other products are mild
steel, cement, ferro-silicon, casting ferro alloys,spun pipes.
On 1.8.89 SAIL acquired its 60 per cent share turning it into
its subsidiary. On 31.3.90 its authorised and paid-up capital,
capacity of ingot, salable, pig iron and mild steel stood at
~.100 crores, ~.81.95 crores, 0.18 MT, 0.18 MT, 0.166 MT and
0.048 HT respectively. The plant was due to be updated shortly.
The nature of its production, etc. may be looked through Table
1.24.
---------------------------------------------------------------------
76
TABLE 1.24
PRODUCTION AND WORKING RESULTS OF VISL DURING 1980-90
Production • • (MT) • Working I
Year I Results ' Ingot Salable • (Rs. in crores) I
Steel Steel I I
1980-81 0.094 0.085 NA
1981-82 0.093 0.074 NA
1982-83 0.094 0.064 NA
1983-84 0.060 0.059 NA
1984-85 0.089 0.070 - 30.9
1985-86 0.070 0.055 - 25.8
1986-87 0.056 0.052 - 30.6
1987-88 0.052 0.039 - 26.2
1988-89 0.057 0.041 NA
1989-90 0.086 0.048 NA
source : Compiled from ARs of SAIL - 1989-90, Department of
Steel, op .cit., 1986-87 - 1989-90 and Statistics of Iron &
Steel Industry, op.cit.
On perusal of Table 1.24 it may be noted that the financial
as well as production performance of the plant during the
period under reference was highly unsatisfactory. Inciden-
tally, during the Seventh Plan an outlay of ~.51.24 crores
was approved but anticipated expenditure was only to the
extent of ~.4 crores.
77
MAHARASTRA ELECTROSMELT LTD.
MEL, India's largest ferro-manganese producer,with a licenc
ed capacity of 66,970 tonnes was taken over by SAIL, on
18.10.86 when its authorised capital and total investment
were ~.5 crores and ~.4.78 crores respectively, both for
utilising some of its facilities for R & D work and for
maximising its production for captive use in SAIL plants.It
produces several grades of special steel also. -..lith success
ful casting of stainless steel billets in 1988, it entered
the stainless stall market. It is now diversifying into other
ferro alloys, low carbon pig iron, etc. The plant is active
ly involved in technology development through a major thrust
in converter, combined blowing technology with tuyere based
system, sintering of Mn ore fines, high pressure sintering
unit & bulk commercial production of medium carbon ferro
manganese thru' converter are some of its major technologi
cal innovations. However, the performance of the company du
ring 1985-91 may be gauged from Table 1.25.
At a glance over Table 1.25 it may be noted that the turn
over of the company during 1985-91 progressed by lips and
bounds. Again, the financial and production performances of
the company were also, more or less, satisfactory. The pro
duction of ferro-manganese, turnover of the company in 1985-
86 stood at 39.29 thousand tonnes and ~.25.56 crores respec
tively,while the figures for the said items as on 31.3.91
amounted to 81.7 thousand tonnes and ~.89.72 crores respec
tively.
78
TABLE 1.25
INSTALLED CAPACITY, PRODUCTION, PROFIT OR LOSS AND TURNOVER
OF !1EL DURii~G 1985-91
Year
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
Installed capacity
Ferromanganese
39.29
41.47
69.05
73.85
88.72
81.70
100
Production (
1 000 tonnes) I
~ Manga-1
' ' I ' t
nese Ferroslags
28.34
22.08
20.07
55.59
12.55
NA
100
* Others
NA
s. 51
7.25
6.38
16.96
NA
75
Profit/ Loss (Rs. in Ml)
110.74
5. 71
14.70
3.32
21.03
21.90
1 Turnover ~ (Rs. in : crores) ' I I I I
25.56
28.60
55.65
66.80
88.85
89.72
* Includes Mild Steel, Alloy Steel, Other Carbon Steel,
Spring Steel, Billets etc.
Source : Compiled from ARs of SAIL 1986-87 - 1990-91, of
MEL 1989-90 and Statistics of Iron & Steel Industry, op.cit.
To conclude the chapter, it may be stated that though India
is regarded as the centre of origin of Iron & Steel Industry,
the industry actually began to blossom only after indepen-
dence. It made a considerable progress in terms of production
and annual rated capacity. The ingot production and capacity
79
rose by 7 times and 2.5 times respectively in India against
--4 times and 2 times respectively in the world during 1950-90~
Though the rate of growth of capacity and production is im-
pressive, it is unsatisfactory in terms of per capita con
sumption and in the context of world production. The ingot
production in 1989-90 was 11.5 MT, while the estimated demand
was 14 MT leading to low per capita consumption of only 15 Kg
in India against 600 Kg in the developed nations. Besides,
India is a distinguished importer of Iron & Steel even in the
80s. Most ironically, its export contains iron ore and import
prevails over export. In the Sixth Plan export and import
resulted in ~.1900 crores and ~.5250 crores respectively.Its
production of steel constitutes1.5 per cent of the global
total, while its population covers 20 per cent of the world
population.
However, an important feature of growth is the growth of re-
search, design and development within the country making it
self-reliant. Another aspect of development is the rapid
growth of PE.steel occupying about 80 per cent of the total
production of steel in the country early in 90s against 0 per
cent early in 50s. Despite abundant supply of high quality
of iron ore, coal,etc., developed infrastructural benefits
of research, design and development, the industry fails to
maintain the growth rate for inefficiency of Public Sector
units since inception due to heavy investment in social over-
heads, poor labour relation, inefficient top management,
" & 196o:..9o respi c ~ i vel, ..
80
backward technology, poor product mix, .low productivity,
delay in taking up modernisation scheme, under utilisation
of capacity, administered price and the like. Of course, the
problem of administered price has been surmounted through
setting up of JPC and it led to a scope for financing ~oder-
nisation schemes. The capacity utilisation of the industry
in 80s, was around 82 per cent due to poor supply of coal,
power, transport bottlenecks, poor management and labour pro-
ductivity, extensive labour troubles and the like. Besides,
indigenous supply of high grade coal is very low.
In short, the prospects should have been extremely bright
for the prevalent intrinsic advantages. By 40 years,its pro-
gress is spectacular only in terms of rate of growth but it
is insignificant.mostly in the context of world production
and per capita consumption. India's production of steel, as
may be recalled forms only 1.5 per cent of the global total. '
With this idea in mind, now we may proceed to the next chap-
ter to build up a conceptual framework of the study.
REFERENCES
(PART I & PART II COMBINED)
1. Administrative Reforms Commission - Report on Publtc
Sector Undertakings, Oct., 1967, Government of India,
p.49.
2. In Search of Objectives, Editorial, Lok Udyog, March,
1971, Vol. IV, No. 12, p. 1366.
3. D 0 No. BPE 1(14} Adv/Fin 67 dated 19.1.68 Compedium
of BPE Circulars, BPE, New Delhi, p. 69.
4. AR of the BPE - 1975-76, Vol. I, P• 78.
5. CPU, 5th Loksabha, 40th Report, p. 135.
6. Galbraith, B., Economic Development in Perspective,
Fawcett, New York, 1963, p. 93.
7. The Hindustan Times dated 19th Dec., 1985.
8. Gorwalla, A.D., Report on the Efficient Conduct of
State ~terprises, New Delhi, 1951, p. 18.
9. Narain, L., Principles and Practice of Public Enter
prise Management, 3rd ed., s.chand and Company Ltd.,
New Delhi, 1989, p. 125.
10. The Financial and Economic Obligations of the Natio
nalised Industries, Cmnd, reproduced from Narain, L.,
op.cit., p. 348.
81
11. Narain, L., Ibid., p.48.
12. Dasgupta, A.K., Public Enterprise Profitability : The
Issues Involved, Indian Journal of Accounting, June -
Dec., 1985, Part I, p.16.
82
13. Dutta, O.N., Cost Management in SAIL, Indian Journal of
Accounting, Vol. XX, ·June 1990, p.44.
14. PE survey- 1984-85, 1986-87, 1987-88 & 1988-89.
15. AR - 1987-88, TISCO, p.43.
16. The Economic Times, Calcutta dated 25.7.91.
17. Ka~ipet, o. and Chary, P.K., Capital Structure Decision
in Public Enterprises - Some Observations, Research
Bulletin, ICWAI, Vol. IX, No. 1 + 2, January and July
1990, p.23.
18. Second Plan, Planning Commission, Government of India,
p.394.
19. Choudhury, M.R., The Iron and Steel Industry in India -
An Economic Geographic Appraisal, 2nd ed., Oxford and
IBH Publishing Company, Calcutta, 1975, pp. 22-45.
20. Ibid.
21. Ball, V., Manual of the Geology of India, Vol. III,
Economic Geology, Government Press, 1981, pp. 339-340.
22. Choudhury, M.R., op.cit.
83
23. Ibid.
24. Ibid., and Tistory, Tiseo, p.2.
25. Tistory, Ibid.
26. Krisnan, M.s., Iron Ores of India, Cal., 1955, p.30.
27. Sidhu, s.s., The Steel Industry in India - Proble~s and
Prospects, VPH (P} Ltd., New Delhi, 1983, p.7.
28. Srinivasan, N.R., Iron and steel Industry of India, A
Monog, TISCO (on the occasion of its Platinum Jubilee),
p.l2, Reproduced from Bansal, M.P., Human Resource
Development in Public Enterprises, RBSA Publishers,
Joypur, 1991, p.36.
29. Repraisal of Steel Board, NCAER, New Delhi, 1963, p.40.
30. Seventh Five Year Plan, Vol. II, 1985-90.
31. U N Monthly Bulletin of Statistics, Feb. 1989.
32. Dutta, R. & SUndaram, K., Indian Economy, S.Chand and
Co. Ltd., New Delhi, 1991, p.525. And Statistics of
Iron & Steel Industry, 9th ed., SAIL, New Delhi, p.395.
33. UN Bull. June-Dec. 1988 And India 1987 : Reproduced from
Bandyopadhyay, T. and Sheel, A., H.S. Economic Geography,
Chhaya Prakasani, Calcutta, 1989, Part I, p.197 and Part
II, p.99.
34. Ibid.
84
35. Statistics of Iron and Steel Industry, op.cit.,pp.395-96.
37. First AR of SAIL 1972-73 & 77th Report of CPU, 1975,
Fifth Loksabha, New Delhi.
38. Bansal, M.P., Human Resource Development in Public Enterprises, Op.cit.·, p. 61.
39. Saga of Steel, SAIL, New Delhi, p.l.
40. $tatistics of Iron & steel Industry, op.cit., p.387.
41. Ibid., pp.375-77.
42. Ibid., p.387.
43. Ibid., pp.375-77.
44. Ibid., p.387.
45. Ibid., pp.375-77.
46. Ibid., p.387.
47. Ibid., pp.375-77.
48. Ibid., p.387.
49. Ibid., pp.375-77.
so. Ibid., p.387.
51. Ibid., pp.375-77.
52. Ibid.
53. Ibid., p.387.
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