)
People die of old age but steel mills shouldn't if backlog of repairs and equipment replacement is avoided. This was said when "steel artist" Bethlehem Corporation - which in good times built Golden Gate Bridge and any number of ships and supplied metal for construction of bridges and tunnels across the country - first declared bankruptcy in 2002 and then sold all its surviving assets to Wilbur Ross, famous for acquiring distressed businesses, the following year.
We also have here quite a few examples of steel companies falling by the wayside because of not attending to repair and renewal crimping their capacity to ride out commodity market downturn. The century-old Burnpur steel plant would have rested in peace a long time ago, had not Steel Authority of India Limited (SAIL), nudged by the government, built a new 2.5 million tonne (mt) mill, including a large blast furnace of 4,060 cubic metres at the ruins of the old plant. One lesson involvement in revival of Burnpur had for SAIL is that intervention by way of modernisation, including periodic induction of new technologies is the antidote to ageing of mills.
Take Bokaro Steel, one of the five integrated mills of SAIL. Bokaro's profit before tax (PBT) slid from Rs 703.43 crore in 2011-12 to Rs 307.5 crore in 2012-13 and then in the first half of last year, it made a loss of Rs 152 crore. Rapid decline in financial performance brought management focus to comprehensive repair and maintenance in all mill sections but particularly coke oven batteries and blast furnaces. Concerted action on this front helped Bokaro end last year with PBT of Rs 202 crore and Rs 316 crore in the 2014-15 first half.
"This is a very challenging year for Bokaro Steel. Progress on machinery rehabilitation in different mill sections and commissioning of our new 1.2 mt cold rolling mill (CRM) should give us a PBT of Rs 760 crore in 2014-15. Value added products from the new CRM should be making significant impact on working in the final quarter," says chief executive Anutosh Maitra.
Supplied by Siemens Vai, "the pickling leg of CRM is operational". Annealing, skin pass and galvanising sections are quickly stabilising for commercial production to start. Plant officials say the technology employed in CRM will enable production of high quality cold-rolled products for "general segments like white goods and roofing."
Stabilisation of the new CRM will make room for Bokaro to carry out major repairing of CRM I and II "over a year or so. My target is to keep the mill in good shape at all times by not postponing repairing and rehabilitation work for short-term benefits," says Maitra. What he is doing is in line with SAIL chairman Chandra Shekhar Verma's guideline that the only way to "ride out difficult times and make the best of good times in the steel industry is for mills to go up the value chain and cut production costs".
Bokaro has in recent times been able to cut cost by Rs 2,100 a tonne of saleable steel by way of better techno-economic parameters like reduction in inputs use, improvement in manpower productivity and achieving self-sufficiency in coke.
"We continue to make progress on cost cutting, in tandem with asset restoration and improved work environment. Our techno-economic parameters are improving," claims Maitra. He is working with three objectives. First, make constant improvement in process parameters in all mill sections. Second, programme capital repairs and plant maintenance in a way as to avoid recurrence of 2012-13 coke crisis.
Third, raise iron ore sintering capacity by building a second 3.7mt unit and promote a 1.2 mt pellet plant on conversion cost basis. In a novel approach for the group, Bokaro will be supplying iron ore fines to the pellet plant to be set up by a third party on build, operate and own basis. Raising supplies of intermediate materials like sintered ore and pellets is needed as Bokaro's nameplate capacity is expanded from 4.58 mt to 5.77 mt. In Verma's scheme of making SAIL a 50 mt steel group by 2025, Bokaro's share is 14 mt. With 32,000 acres at its disposal, housing that much capacity appears an easy proposition. Going up to 10 mt should not be a problem. But encroachers occupying pockets of land totalling about 800 acres will make it difficult to pack in the balance 4 mt and building a power plant. Maitra has the onerous task of freeing land under illegal occupation and stopping new encroachments.
