P A R T - 1 GLEANINGS FROM THE PRESS EDITORIAL I. SAIL SCRAPS SALEM STEEL DIVESTMENT PLAN

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1 P A R T - 1 EDITORIAL We have read a news item appearing in Economic Times dated 11/03/2005. According to this News Mr. J.P. Singh, Jt. Secretary, Steel addressing the second Global Steel Conference 2005 at Goa, stated that industry will be consulted on steel policy soon. We have been hearing about Steel Policy from Steel Ministry from time to time. The Association attended many meetings on Steel policy draft nearly 2 years ago. There was no action during the last two years. We now learn that the Policy was finalized and submitted to the cabinet committee in September Then we heard that it has been sent back to Steel Ministry for discussing it with group of Secretaries. Steel Secretary in the meeting taken by him of the industry on circulated a draft to industry people and sought comments. Almost all concerned steel manufacturers have sent their views to steel ministry, but nothing is known further. It is possible that due to absence of Steel Minister, who had been busy in the elections in Bihar for over 3 months, may not have enough time to look in the comments or hold any meetings. The Steel Policy has become like a shuttlecock, which is being sent from one pillar to the other pillar without any final outcome. The steel industry is left high and try to draw its own conclusions. We hope that steel policy is announced as early as possible. We also hope that it does not give importance to the main producers, but also consider the Secondary steelmanufacturing sector reasonably well as pleaded by us. GLEANINGS FROM THE PRESS I. SAIL SCRAPS SALEM STEEL DIVESTMENT PLAN Steel Authority of India (SAIL) has shelved the divestment plan in Salem Steel Plant following the change in the stainless steel market scenario and the turnaround of the plant. The Salem plant, which incurred a net loss of Rs. 119 crore in , posted a net profit of Rs. 2 crore during The trend during the current year is positive. Now the steel ministry is proposing to conduct a techno-economic feasibility assessment for investing Rs. 500 crore on a steel melting shop at SSP to enhance its productivity and profitability. Union Minister for steel Ram Vilas Paswan has informed Union minister for shipping and transport TR Baalu that the SAIL board at its recent meeting had reviewed the progress of disinvestment in Salem steel and considering the time lapsed since the process was initiated and change in the market conditions, decided that the bidding process be closed. ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

2 In a statement issued here, Mr. Baalu said Mr. Paswan had written to him that the Centre had given up the present bidding process for disinvestment of SSP, terming it as closed. He has urged the ministry to invest Rs. 500 crore for the installation of a steel melting shop at SSP to increase its production capacity and profits. Mr. Baalu has been pursuing the issue of privatization of SSP with the Union steel ministry since last year. He had met Mr. Paswan, the Steel secretary and SAIL chairman and impressed up on them the positive initiatives being undertaken by workers and the management to turn the plan around. (FINANCIAL EXPRESS DATED 25/02/2005) II. INCREASE IN FREIGHT RATES ON IRON ORE A 15% increase in freight rates on iron ore due to the railway budget reclassification is expected to hit all steel players who do not operate own rail tracks, as well as iron ore exports. While the steel industry is rejoicing over the deterrent on exports, some players, like Essar Steel and Ispat Industries who don t have private siding in their plants, will be hit. The 15% hike will translate to a Rs. 150-Rs. 200 per tonne hike in cost. Integrated players like SAIL, Tisco and Vizag Steel have their own tracks and will not be affected by the reclassification which changes the level from 140 to 160 an increase of 20, which translates to 15.4% hike in rates. Says V S Jain, chairman, SAIL, We are happy there is no change in tariff. Iron ore exporters like NMDC will be hit. The industry has been protesting against the increasing exports which are seen as contributing to China s value addition chain, at the cost of India, A minuscule section of the domestic steel industry may also feel the pinch due to 3.5%- 4% increase in rates on the movement of sponge iron. III. STEEL CLUSTERS & THEIR ECONOMY (ECONOMIC TIMES DATED 27/02/2005) It may kindly be noted that in certain states steel clusters are growing. For example in Orissa a number of companies want to install integrated steel plants or sponge iron steel melting and then rolling. The projects proposals submitted to state Government of Orissa by various companies national and international comes to 44 million tonnes per annum by year This means almost doubling the existing capacity of steel making. POSCO a Korean company wants to install a 10 MT plant in Orissa. The negotiations are at advanced stage. This is not in the interest of country because Iron ore resources in the state will be decreased very fast. The number of other projects are coming up in Orissa would mean development of clusters in the steel industry. ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

3 IV. DUTY CUTS ON METALS TO CURB PRICE RISE The budget has arrested any move to increase prices of stainless and alloy steel by the domestic steel manufacturers, by rationalizing import duty from 15% to 10%. It has also simultaneously increased excise duty from 12% to 16% for all type of steel manufactured in the country. The prices of steel may go up by Rs. 1,200 1,300 per tonne and this is likely to hit the margins since manufacturers may not be able to pass this on to the end user, industry sources said. However, Sushil Finance metal analyst Manish Joshi said the increase in excise duty will not hurt as most consumers of steel will get full Modvat except household utensils. According to Jindal stainless director (finance) Arvind Parakh the reduced import duty for stainless steel may not translate into large imports into India and soften domestic prices as the international prices have also remained firm. He expected the focus on infrastructure, particularly the upgradation in the five metros to increase steel demand in general and stainless steel in particular. India s stainless steel production is estimated at about 1.4 million tonne with 40% being exported. Around 70% of the end-use pattern in India is dominated by Kitchen usage while about 4% goes into construction and transportations sectors. In the other steel segments, the reduction in import duty from 15% to 5% for coking coal with ash content of more than 12% will bring down input costs. This could benefit companies like Tata Steel and SAIL. However, companies like Essar Steel operating its furnace on power would not benefit. Cheering the budget, Essar Steel MD Prashant Ruia said, the budget has corrected duty anomalies in certain inputs like coking coal, graphite electrodes. However, the decision to raise excise duty will raise cost and evoke strong sentiment from the non-modvatable consuming class. The reduction in custom duty for coking coal needs to be seen in the perspective of rising of rising coking coal prices. Tata Steel had contracted coking coal at $60 per tonne last and $125 per tonne this year. As a result, the outflow in term of custom duty which was (15%) $9 will now be (5%) $6.25, Mr. Joshi said. The rationalization of custom duty from 15% to 10% on zinc will benefit all galvanizing units. Jindal Vijayanagar will save roughly Rs. 18 crore on account of rationalization of duties on inputs including zinc, a Jindal Vijayanagar spokesperson said. V. DUTY CUT ON HIGH-ASH COAL (FINANCIAL EXPRESS DATED 01/03/2005) Coking Coal used in the manufacturing of Pig Iron is not available. The indigenous coal is having high ash content. It has to be washed in the coal washeries before using it in the furnaces. The coal, which is mined in India is having very high ash content and therefore, its use in power generation is becoming environmental ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

4 hazard. Tones to ash is thrown over the area around thermal plants. The ash is used for manufacturing of bricks and cement etc. Government of India in its recent Budget has reduced Customs duty on such coal to 5%. Government of India has already predicted shortage of coal. Imported coal is being unloaded at various ports such as Vizag, Chennai, and Goa and other small ports. China has started restricting export of coal due to increase of local demand. VI. TATA STEEL TO BUY COAL MINES ABROAD According to the news item appearing in Financial Express dated 10/03/2005, it is noted that TISCO is planning to increase its steel making capacity to 15 Million tonnes. It may also buy coalmines to ensure supplies for expansion. TISCO faces competition for raw material from Boasteel Group if China and SAIL. However TISCO is known for its ability to make its project work. It is in touch with all major steel consumers in India and abroad to sustain its increased production. NEW MEMBERS We are reproducing below the names & addresses of new members who have joined AIIFA recently. The Association is grateful to these companies for their becoming members of the Association. SHYAM STEEL INDUSTRIES LTD Membership No. 546 : 115, College Street, 1 st Floor, Kolkata Tel: /3311 Fax: ssi@shyamsteel.com Factory Address & Tel./Fax No. : Rathuria Industrial Estate, Angadpur, Durgapur, (W.B) : Mr. S.S. Beriwala Products made : MS Ingots, Calcium Carbide & Ferro Chrome ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

5 ALOK INGOTS (MUMBAI) PVT.LTD Membership No. 547 : 119, Dadi Seth Agyari Lane Office#6, Mumbai Tel : Fax ; aimpl@alokexport.org Factory Address & Tel./Fax No. : 95/3/2, Vijaypur Village, Taluka Wada, Dist. Thane, : Alok Garodia Products made : Billets STARLIGHT IRON PVT LTD Membership No. 548 : U-112, 2 nd floor, Vidhata House, Vikas Narg, Shakarpur New Delhi Tel : /500 Fax ; iril@bol.net.in Factory Address & Tel./Fax No. : Vill. Chingdiposi, Post Balibandh, Dist. Keonjhr (Orissa) : Rajesh Goyal Products made : Steel Ingots ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

6 EMKAY FASTENERS PVT LTD Membership No. 433 : 6-MIDC MURBAD, THANE Tel : / /71 Factory Address & Tel./Fax No. : As above : Mr. Suresh Bundiwal (Director) Products made : M.S. Ingots SHRIDHAR CASTINGS PVT LTD Membership No. 549 : 23, Pushpkunj Complex, Central Bazar Road, Ramdajpeth, Nagpur 10 Tel : , , Fax : scpl1999_ngp@sancharnet.in Factory Address & Tel./Fax No. : 26 KMS Nagpur Jaoner Road, The- Jaoner, Nagpur Managing Director : Mr. Praful shridhar Vaidya Products made : M.S. & Alloy Steel SHREE SALASR FERRO METAL PVT LTD. Membership No. 550 : B-002, Runwal Garden, Raunak Park, Pokhran Road No. 2, Thane (W) Tel : / Fax : Factory Address & Tel./Fax No. : Gut No. 92, Village Abitgar, Wada- Sahapur Road, Tal. Wada : Mr. Farirchand Agarwal Mr. Pawan Tibrewala Products made : M.S. Ingots ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

7 BABA MUNGIPA STEEL INDUSTRY PVT LTD. Membership No. 551 : 202A, 2 nd floor, Hallmark, L.B.S. Marg, Mulund (W), Mumbai Tel : , Factory Address & Tel./Fax No. : Gut No. 220, Plot No. 9, Village Khupri, Tal Wada, Dist. Thane, Maharashtra : Mr. Rajpal Panghal Mr. Ishwar G. Samota Products made : M.S. Ingots DADIJI STEELS LIMITED Membership No. 552 : 308, Narayan plaza, Exhibition Road, Patna Tel ; / Fax : Factory Address & Tel./Fax No. : Sabalpur, Patna Managing Director : Mr. Ramesh Chandra Gupta Products made : M.S. TOR/ROD/SECTION DUGGAR FIBER PVT LTD Membership No. 553 : BD-76, Vishakha Enclave Pitam Pura, Delhi Tel : duggar_fiber@hotmail.com Factory Address & Tel./Fax No. : C-10, S.M.A. Coop. Industrial Estate, G.T. Karnal Road, Delhi : Mr. Purushottam Kumar Gupta (Dir.) Mob : Products made : Stainless Steel Flate, Round ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

8 P A R T - 2 I. CENTRAL EXCISE NOTIFICATION NO.3/2005-CENTRAL EXCISE DATED 24/02/2005(F.NO.4/3/2004- CX.1(pt. V) In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below and falling within the chapter, headings, sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), (hereinafter) referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise specified thereon under the First Schedule to the Central Excise Tariff Act (hereinafter referred to as the First Schedule), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table. S.No. Chapter or heading or Sub-heading or tariff item Description of goods Rate of duty Waste and scrap arising out of manufacture of cold rolled stainless steel patties or patta Nil or 7220 Pettis or pattas when subjected to any process other than cold rolling Nil Circles used within the factory of production in the manufacture of utensils Nil Sd/- (V. Sivasubramanian) Deputy Secretary to the Government of India ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

9 II. CENTRAL EXCISE CIRCULAR NO. 811/8/2005-CX DATED 1/03/2005 (F.NO. 139/4/2002-CX 4) To, All Chief Commissioners of Central Excise All Commissioners of Central Excise All Commissioners (Appeals) Director General of Central Excise intelligence WHETHER SLITTING OF HR/CR COILS OF IRON & STEEL SHEETS INTO STRIPS WOULD AMOUNT TO MANUFACTURE REGARDING I am directed to invite your attention to Board s circular No. 584/21/2001-CX dated wherein it was clarified that cutting of HR/CR coils of Iron or non-alloy steel into sheets or slitting into strips of lesser width; or slitting of sheets into strips will amount to manufacture if the resultant product is classifiable under different sub-heading of the Central Excise Tariff. 2. The said Circular was quashed by the Hon ble High Court of Delhi vide its order dated holding that these processes would not amount to manufacture. Department s appeal filed against Delhi High Court Order has been dismissed by Hon ble Supreme Court. 3. In the light of the Judgement of Apex Court, the Circular No. 584/21/2001-CX dated is withdrawn herewith. 4. Field formations may be informed suitably. 5. Hindi version will follow. Sd/- (Manish Mohan) Under Secretary to the Government of India ISSUE NO. 2 VOL. III INDUCTION FURNACE NEWSLETTER to

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