CII Steel Summit. Advantage India- - An enabling framework for Growth. 4 TH November O.P.Mishra. CII Steel Summit-Nov 09 1

Transcription

1 CII Steel Summit Advantage India- - An enabling framework for Growth. O.P.Mishra 4 TH November 2009 CII Steel Summit-Nov 09 1

2 Indian Steel Scenario Demand is increasing by 6-7% Last decade more production share by secondary producers Now Big plants by primary producers Indian demand to touch 100 million tonnes 3-4 years time Localisation of production capacity in eastern states like Orissa, Jharkhand and Chattishgarh Indian Steel Scenario. CII Steel Summit-Nov 09 2

3 Steel Production Trend in India Exponential Growth Indian Steel Scenario CII Steel Summit-Nov 09 3

4 Regional Clustering of Steel Plants Indian Steel Scenario CII Steel Summit-Nov 09 4

5 Logistics Infrastructure Not ready to meet increased demand Secondary producers put pressure on road Primary producers stress on Rail, road and port Eastern states acute shortage in all three sectors CII Steel Summit-Nov 09

6 Material Movement in Steel Sector by ( ) Iron- Ore Coking- Coal Non-coking coal (for sponge iron) Thermal Coal Others Total Raw Material Million T Total Steel Million T Orissa Jharkhand Chattisgarh Others Total Present Raw Material Movement : 202 MT and Steel: 55MT Logistics Requirement CII Steel Summit-Nov 09 6

7 % Usage of Logistics Infrastructure in Iron & Steel Sector by Logistics Requirement CII Steel Summit-Nov 09 7

8 Gap in Rail & Road Traffic in Million-tonne-km Load on Rail Network Double in in 2012 Logistics Requirement CII Steel Summit-Nov 09 8

9 Share of Steel Sector at Ports in Million T Port traffic Increase 76% by 2012 Logistics Requirement CII Steel Summit-Nov 09 9

10 Severe Pressure on Logistics Infrastructure CII Steel Summit-Nov 09 10

11 Logistics Industry In India ( ) Billion US$ Million T $385billion 3500 Million T $94 billion Year Sizes in Billion US$ Million T CII Steel Summit-Nov 09 11

12 Share of Logistics Cost in Total Sales of various Industry share in % Cement Steel F&B Durable Apparel Auto Industry Type CII Steel Summit-Nov 09

13 Surface freight in India is very high Average Surface Freight in Cent/Km Freight in Cent Europe Japan Canada India Country CII Steel Summit-Nov 09

14 Present Trend in Indian Logistics Question Mark:? Invest more fund for future growth OR Consider disinvesting Waterways Ports High Market Growth Stars : Invest more fund for future growth Low Railways High Market Share Dogs Strategy: Consider withdrawing Cash Cows: Milk profits to finance the growth Low CII Steel Summit-Nov 09

15 Infrastructure - Rail Advantage Railways ECO Friendly Resilience Low Basic Cost Country wide Network Logistics Provider ( Indian Railways) in collaboration with steel plants needs to leverage this advantage & sieze opportunity CII Steel Summit-Nov 09 15

16 Infrastructure - Rail Steel sector highly dependent and it is most appropriate for primary producers So far driven by quantity and able to meet tonnage requirement Approach to improve service quality like damage/ loss, deliveries and cost caused by need of unitizing etc to be looked into Special wagons for steel dispatches particularly CR Coils CII Steel Summit-Nov 09 16

17 Infrastructure - Rail A very clear policy about wagons, freight etc for steel sector emerge Incentives/cost sharing for efficient rail related investments Connectivity to the port and a clear policy- example Dhamara Port rail connectivity to port CII Steel Summit-Nov 09

18 Infrastructure - Rail Railways surplus land with proper rail connectivity may be offered to steel plant develop their processing centre/hubs Steel freights are one of the highest in the world CII Steel Summit-Nov 09

19 Infrastructure - Road Road infrastructure - highly inadequate State road connecting to NH in bad shape Leading to congestion in route and also in the city Widening of roads 4/6 lanes Creation of transportnagars to avoid congestion on the roads CII Steel Summit-Nov 09

20 Road Logistics Issues for Steel Plants in India Logistics Requirement - Road CII Steel Summit-Nov 09 20

21 Infrastructure - Ports New Ports Logistics Requirement - Ports CII Steel Summit-Nov 09 21

22 Infrastructure - Ports Port operations are slow leading to waiting time of the ships No. of ports inadequate Draft at the port Port connectivity with hinterland-rail/road CII Steel Summit-Nov 09

23 Infrastructure - Waterways? CII Steel Summit-Nov 09

24 Challenges Total Delivered System Cost (TDSC ) CII Steel Summit-Nov 09 24

25 MODEL FOR LOGISTICS PROVIDER Steel Plant Supplies / Sourcing Customer / Processing Agencies LP Logistics Provider LP s role is to Deliver Right Quantity at Right Time without damage in orderly manner Customer 2 nd Leg STRONG INTERFACE STEEL PLANT AND LOGISTICS PROVIDER Logistics Requirement CII Steel Summit-Nov 09 25

26 In conclusion, National Transport Policy in needed for different Logistics stakeholders Slurry Road Logistics Logistics Service Providers Steel Producers Ports Rail Logistics Key success factor will be integration and partnership across the members of the Logistics value chain CII Steel Summit-Nov 09 26

27 Food for Thought Alternate mode of Transportation Inland Waterways Slurry Transportation CII Steel Summit-Nov 09 27

28 Slurry Transportation 400% in 5 years CII Steel Summit-Nov 09 28

29 Thank You CII Steel Summit-Nov 09 29

30 BACK UP SLIDES CII Steel Summit-Nov 09 30

31 TDSC RailVision of Logistics Provider Road Base Rail Freight Cat B Freight Unitization Minimum TDSC Idle 6% Handling Wagon Handling Siding & Shunting Handling Charges 2nd Leg Freight 2nd Leg Freight Rail : Freight + 21% Road : Freight + 7% CII Steel Summit-Nov 09 31

32 Railways % Market share of Railways CII Steel Summit-Nov 09 32

33 Areas of Concern Railways Total Material to be handled by 2012 for Steel Sector MT Railway plan for 200MT only 44% of Total Timeliness of completion of infrastructure projects CII Steel Summit-Nov 09 33

34 Areas of Concern Wagon Policy Railways Increase in axle load i. increase in conveyor rate and storage place. ii. Stress on existing infrastructure CII Steel Summit-Nov 09 34

35 Railways Areas of Concern Compatibility study on Railway change and Steel Plants Infrastructure Customer Orientation CII Steel Summit-Nov 09 35