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Steel Industry in India

Steel Industry in India is on an upswing because of the strong global and
domestic demand. India's rapid economic growth and soaring demand by sectors like
infrastructure, real estate and automobiles, at home and abroad, has put Indian steel
industry on the global map. According to the latest report by International Iron and
Steel Institute (IISI), India is the seventh largest steel producer in the world.
The origin of the modern Indian steel industry can be traced back to 1953 when a contract for
the construction of an integrated steelworks in Rourkela, Orissa was signed between the Indian
government and the German companies Fried Krupp und Demag AG. The initial plan was an
annual capacity of 500,000 tonnes, but this was subsequently raised to 1 million tonnes. The
capacity of Rourkela Steel Plant (RSP), which belongs to the SAIL (Steel Authority of India
Ltd.) group, is presently about 2 million tonnes. At a very early stage the former USSR and a
British consortium also showed an interest in establishing a modern steel industry in India. This
resulted in the Soviet-aided building of a steel mill with a capacity of 1 million tonnes in Bhilai
and the British-backed construction in Durgapur of a foundry which also has a million tone
Capacity.
The Indian steel industry is organized in three categories i.e., main producers, other major
producers and the secondary producers. The main producers and other major producers have
integrated steel making facility with plant capacities over 0.5 mT and utilize iron ore and
coal/gas for production of steel. The main producers are Tata Steel, SAIL, and RINL, while the
other major producers are ESSAR, ISPAT and JVSL. The secondary sector is dispersed and
consists of: (1) Backward linkage from about 120 sponge iron producers that use iron ore and
non-coking coal, providing feedstock for steel producers; (2) Approximately 650 mini blast
furnaces, electric arc furnaces, induction furnaces and energy optimizing furnaces that use iron
ore, sponge iron and melting scrap to produce steel; and (3) Forward linkage with about 1,200
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re-rollers that roll out semis into finished steel products for consumer use.


Structural Weaknesses of Indian Steel Industry
Although India has modernised its steelmaking considerably, however, nearly 6% of its
crude steel is still produced using the outdated open-hearth process.
Labour productivity in India is still very low. According to an estimate crude steel output
at the biggest Indian steelmaker is roughly 144 tonnes per worker per year, whereas in
Western Europe the figure is around 600 tonnes.
India has to do a lot of catching in the production of stainless steel, which is primarily
required by the plant and equipment, pharmaceutical and chemical industries.
Steel production in India is also hampered by power shortages.
India is deficient in raw materials required by the steel industry. Iron ore deposits are
finite and there are problems in mining sufficient amounts of it. India's hard coal deposits
are of low quality.
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Insufficient freight capacity and transport infrastructure impediments too hamper the
growth of Indian steel industry.
Strengths of Indian Steel Industry
Mature production base
Positive stimuli from construction industry
Booming automobile industry
Outlook
The outlook for Indian steel industry is very bright. India's lower wages and favourable energy
prices will continue to promise substantial cost advantages compared to production facilities in
(Western) Europe or the US. It is also expected that steel industry will undergo a process of
consolidation since industry players are engaged in an unfettered rush for scale. This is evident
from the recent acquisition of Corus by Tata. The deployment of modern production systems is
also enabling Indian steel companies to improve the quality of their steel products and thus
enhance their export prospects.
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Steel Authority of India Limited (SAIL) is one of the largest state-owned steel-making
company based in New Delhi, India and one of the top steel makers in World. With a turnover
of 48681 crore (US$8.9 billion), the company is among the top five highest profit earning
corporates of the country. It is a public sector undertaking which trades publicly in the market is
largely owned by Government of India and acts like an operating company. Incorporated on
January 24, 1973, SAIL has more than 1 lakh employees. During 2010-11, the manpower of
SAIL reached a level of 110794 (as on 31.3.2011) from 116950 (as on 1.4.2010) The company's
current chairman is C.S Verma. With an annual production of 13.5 million metric tons, SAIL is
the 14th largest steel producer in the world






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Steel Authority of India Limited



Type
State-owned enterprise
Public
Traded as
NSE: SAIL
LSE: SAUD
Industry Steel
Founded 1954
Headquarters New Delhi, India
[1]

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Key people Chandra Shekhar Verma (Chairman)
Products Steel, flat steel products, long steel products, wire products, plates
Revenue 48681 crore (US$8.9 billion) (2012)
[2]

Net income 3542 crore (US$650 million) (2012)
[2]

Total assets 20425 crore (US$3.7 billion) (2011)
Employees 131,910 (2006)
Website www.sail.co.in
History
1959-1978
SAIL traces its origin to the Hindustan Steel Limited (HSL) which was set up on January 19,
1954. HSL was initially designed to manage only one plant that was coming up at Rourkela.
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For Bhilai and Durgapur Steel Plants, the preliminary work was done by the Iron and Steel
Ministry. From April 1957, the supervision and control of these two steel plants were also
transferred to Hindustan Steel. The registered office was originally in New Delhi. It moved to
Calcutta in July 1956, and ultimately to Ranchi in December 1959.
A new steel company, Bokaro Steel Limited (Bokaro Steel Plant), was incorporated in January
1964 to construct and operate the steel plant at Bokaro. The 1 MT phases of Bhilai and Rourkela
Steel Plants were completed by the end of December 1961. The 1 MT phase of Durgapur Steel
Plant was completed in January 1962 after commissioning of the Wheel and Axle plant. The
crude steel production of HSL went up from 1.58 MT (195960) to 1.6 MT. The second phase
of Bhilai Steel Plant was completed in September 1967 after commissioning of the Wire Rod
Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem Mill - was commissioned in
February 1968, and the 1.6 MT stage of Durgapur Steel Plant was completed in August 1969
after commissioning of the Furnace in SMS. Thus, with the completion of the 2.5 MT stage at
Bhilai, 1.8 MT at Rourkela and 1.6 MT at Durgapur, the total crude steel production capacity of
HSL was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73.
[citation needed]
IISCO
was taken over as a subsidiary in 1978 and later merged in 2006.

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Major Units
SAIL Integrated Steel Plants
1. Rourkela Steel Plant (RSP) in Odisha set up with German collaboration (The first
integrated steel plant in the Public Sector in India, 1959)
2. Bhilai Steel Plant (BSP) in Chhattisgarh set up with Soviet collaboration (1959)
3. Durgapur Steel Plant (DSP) at Durgapur, West Bengal set up with British collaboration
(1965)
4. Bokaro Steel Plant (BSL) in Jharkhand (1965) set up with Soviet collaboration (The
Plant is hailed as the countrys first Swadeshi steel plant, built with maximum
indigenous content in terms of equipment, material and know-how)
5. IISCO Steel Plant (ISP) at Burnpur (near Asansol), West Bengal
Special Steel Plants
1. Steel Authority of India Limited (SAIL), Kanpur, Uttar Pradesh
2. Alloy Steels Plants (ASP), Durgapur, West Bengal
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3. Salem Steel Plant (SSP), Tamil Nadu
4. Visvesvaraya Iron and Steel Limited (VISL), at Bhadravathi, Karnataka
Ferro Alloy Plant
1. Chandrapur Ferro Alloy Plant (CFP) in Maharashtra
Central Units
1. Centre for Engineering and Technology
2. Research and development centre for iron and steel
3. Management Training Institute
4. SAIL safety organization


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5. Raw materials division
6. Central Marketing Organization
7. SAIL consultancy organizatio











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INDIAN STEEL PRODUCTION
The Indian steel industry have entered into a new development stage from 2005-06, riding high
on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in
India becoming the 7th largest producer of steel.
Indias steel consumption will continue to grow at nearly 16% rate annually, till 2012, fuelled by
demand for construction projects worth US$ 1 trillion.
The National Steel Policy has envisaged steel production to reach 110 million tonnes by 2019-
20. However, based on the assessment of the current ongoing projects, both in greenfield and
brownfield, Ministry of Steel has projected that the steel capacity in the county is likely to be
124.06 million tonnes by 2011-12.
Production
Steel industry was relicensed and decontrolled in 1991 & 1992 respectively.
Today, India is the 7th largest crude steel producer of steel in the world.
In 2008-09, production of Finished (Carbon) Steel was 59.02 million tones.
Production of Pig Iron in 2008-09 was 5.299 Million Tons.
Last 5 year's production of pig iron and finished (carbon) steel is given below:
(in million tons)
Category 2004-05 2005-06 2006-07 2007-08 2008-09
Pig Iron 3.228 4.695 4.993 5.314 5.289
Finished Carbon Steel 40.055 44.544 55.416 58.233 59.02


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Imports of Iron & Steel
Iron & Steel are freely importable as per the extant policy.
Last five years import of Finished (Carbon) Steel is given below:-





Exports of Iron & Steel
Exports (Qty. in Million Tonnes)
Year Finished (Carbon) Steel Pig Iron
2004-2005 4.381 0.393
2005-2006 4.478 0.440
2006-2007
(Prov.estimated)
4.750 0.350
2007-2008 4.627 0.560
2008-2009
(Prov.estimated)
3.482 0.350
Year Qty. (In Million Tons)
2004-2005 2.109
2005-2006 3.850
2006-2007
(Partly estimated)
4.436
2007-08 6.581
2008-2009
(Partly estimated)
5.149
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India has also emerged as the largest sponge iron/direct reduced iron (DRI) producing country in
the world in 2010, a rank it has held on since 2002. Sponge iron production grew at a CAGR of
11 per cent to reach a level of 20.74 million tonne (MT) in 2009-10 as compared to 14.83 MT in
2005-06. India is expected to become the second largest producer of steel in the world by 2015-
16, on account of growing steel demand, rich resources base of iron ore, skilled manpower and
vast experience of steel making and the huge capacity expansion planned and being executed in
the steel sector.
India has recorded a growth of over 8.6 per cent, producing 6.35 MT of steel in March 2011 as
against 5.85 MT in the corresponding month in 2010, according to World Steel Association
(WSA).
Steel exports has increased by 17.3 per cent as it reached an estimated 2.46 MT, while steel
imports were at an estimated 5.36 MT, a growth of 2.8 per cent in 2010.
Crude steel production was registered at 51.57 MT during April-Dec 2010 in the country as per
Joint Plant Committee (JPC). The production is expected to be nearly 110 MT by 2012-13.


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The steel industry in India is likely to receive huge domestic and foreign investments.
Posco, South Korea, plans to set up a 12 MT integrated steel plant in Orissa.
Mittal Group's announced plans to set up their 12 MT integrated steel unit in Orissa.
Bhilai Steel Plant (BSP), the flagship entity of the Steel Authority of India Limited
(SAIL), has secured a fresh order of exporting rails to Sri Lanka. The order of about
14,000 tonnes is for the UIC-60 grade of rails. Earlier, the company had received an
order to supply 6,500 tonnes of rails to Sri Lanka.
Tata Steel Ltd (TSL) and Nippon Steel Corporation (NSC) have signed a joint venture
(JV) agreement to setup India's first continuous annealing and processing line (CAPL)
for the production of 600,000 tonnes per annum of automotive cold-rolled steel at
Jamshedpur, India. The project will be set up at a capital cost of approximately US$
509.08 million and is expected to come on stream in 2013.






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SAIL INTRODUCTION
Steel industry has a major role to play in the economic growth of India. With new global
acquisitions by Indian steel giants, setting up of new state-of-the-art steel mills, modernization
of existing plants, improving energy efficiency and backward integration into global raw
material sources, India is now on the centre of the global steel map. Consumption of steel in the
construction sector, industrial applications, and transport sector has been on the rise and special
steel usage in engineering industries such as power generation, petrochemicals and fertilizer
industry as well as defense sector is also growing.
Steel Authority of India Limited (SAIL) (NSE: SAIL, LSE: SAUD is one of the largest state-
owned steel makers in India. With a turnover of 48,681 crore (US$ 0.81 billion), the company
is among the top five highest profit earning corporate of the country. It is a public sector
undertaking which trades publicly in the market is largely owned by Government of India and
acts like an operating company. Major plants owned by SAIL are located at Bhilai, Bokaro,
Durgapur, Rourkela, Burnpur (near Asansol) and Salem.
Any transaction in foreign Exchange is governed by Foreign Exchange Management ACT
1999. The FERA had its origin by defense of India rules (DIR) 1935. This control was exercised
in order to ensure the foreign exchange particularly due to severe constraints on exchange
reserve due to Second World War. Later this act modified with certain amendments in 1973 and
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become effective from 01.01.1974. Further relaxation of this affect was effected since 1994. The
same was repealed from 1st June, 2000 and all foreign exchange transactions from this date will
be governed by the provisions of the Foreign Exchange Management Act 1999.As per the
foreign exchange Management Act 1999 the Reserve Bank of India principally controls the
movement of the Foreign Exchange of the country in compliance with the provisions of this act
and any rules, regulations, notification or directions made there under give to the authorized
person any direction in regard to making of payment or the doing or desist from doing any act
relating to foreign security. Import and Export is the major part of forex management, as goods
along with the abroad currency in being transacted.
Joint Ventures
NTPC SAIL Power Company Limited (NSPCL)
A 50:50 joint venture between Steel Authority of India Ltd. (SAIL) and National Thermal
Power Corporation Ltd. (NTPC Ltd.); manages the captive power plants at Rourkela, Durgapur
and Bhilai with a combined capacity of 314 megawatts (MW). It has installed additional
capacity by implementation of 500 MW (2 x 250 MW Units) power plant at Bhilai. The
commercial generation of 1st Unit has commenced in April'2009 and the 2nd Unit in October
2009
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NSPCL, Rourkela
NSPCL, Durgapur
NSPCL, Bhilai
Bokaro Power Supply Company Pvt. Limited (BPSCL)
This 50:50 joint venture between SAIL and the Damodar Valley Corporation formed in
January 2002 is managing the 302-MW power generating station and 660 tonnes per
hour steam generation facilities at Bokaro Steel Plant. BPSCL has proposed to expand its
capacity by installing 2x250 MW coal based thermal unit at Bokaro. In addition, construction
activities are underway for installation of 9th Boiler (300T/Hr) & 36 MW Back Pressure Turbo
Generator (BPTG) project at Bokaro.
mjunction services limited
mjunction services limited operating in Information Technology and the Internet, is a 50:50
venture promoted by SAIL and TATA Steel. Founded in February 2001, it is today not only
India's largest eCommerce company (having eTransacted worth over Rs.90,000 crores till
date) but also runs the world's largest eMarketplace for steel.m Business volume of the
company in terms of Transaction Value has soared from Rs 94.35 crores in FY'02 to Rs
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24,854 crores in FY 11, registering a spectacular CAGR of 86%. mjunction's growth has not
only been in terms of transactional value, revenue and profits. In the space of just 10 years, it
has established offices at 12 locations across the country.
Today, mjunction offers a wide range of eSelling, eSourcing, eFinance and eKnowledge
services across diverse industry verticals that empower businesses with greater process
efficiencies. mjunction has service offerings spanning the entire eCommerce spectrum and
operates through - .metaljunction.com, buyjunction.in, coaljunction.in, autojunction.in,
straightline.in, financejunction. in, valuejunction.in, and mjunctionedge.
mjunction is an ISO 9001:2008, ISO 27001 and CMMI Level 3.certified company.
SAIL-Bansal Service Center Ltd
SAIL has formed a joint venture with BMW industries Ltd. on 40:60 basis to promote a
service centre at Bokaro with the objective of adding value to steel.
Bhilai JP Cement Ltd
SAIL has incorporated a joint venture company with M/s Jaiprakash Associates Ltd to set up
a 2.2 MT slag based cement plant at Bhilai. The company shall commence cement
production at Bhilai by March'2010, whereas clinker production at Satna shall start within
2009.
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Bokaro JP Cement Ltd
SAIL has incorporated another joint venture company with M/s JaiPrakash Associates Ltd to
set up a 2.1 MT cement plant at Bokaro utilizing slag from BSL. The project implementation
is under progress with commencement of cement production likely by july 2011
SAIL&MOIL Ferro Alloys (Pvt.) Limited
SAIL has incorporated a joint venture company with Manganese Ore (India) Ltd on 50:50
basis to produce ferro-manganese and silico-manganese required for production of steel..
S&T Mining Company Pvt. Ltd
SAIL has incorporated a joint venture company with TATA Steel for joint acquisition &
development of coal blocks/mines. New indigenous opportunities for coking coal
development are being explored by the Joint Venture company for securing coking coal
supplies.


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International Coal Ventures Private Limited
International Coal Ventures Private Limited is a special purpose vehicle set up to achieve the
target of making steel PSUs self-reliant in the area of coking coal, a joint venture company
has been incorporated composed of five central PSU companies i.e. SAIL, Rashtriva Ispat
Nigam Limited (RINL), Coal India Limited and other target countries.
Development of Hajigak iron ore mines in Afghanistan
A consortium comprisng state-owned NMDC and RINL and private sector steel players JSW,
JSW Ispat, Jindal Steel and Power, and Monnet Ispat and Energy and led by SAIL, plan to
invest $75 million in first phase for the development of Hajigak iron ore mines in Afghanistan.
The consortium, in November 2011, had won the mining rights for three iron ore mines which
are said to contain 1.28 billion tonnes of rich reserves.L11
Development of mines through outsourcing
SAIL has decided to outsource development of two virgin iron ore mines at Rowghat in
Chhatisgarh and China in Jharkhand with an annual capacity of 14 Million Tonnes and 15
Million Tonnes, respectively. The development of each mine is likely to cost between Rs.
1,000- 1,200 crore.12-1
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Ownership and Management
The Government of India owns about 86% of SAIL's equity and retains voting control of the
Company. However, SAIL, by virtue of its Maharatna status, enjoys significant operational
and financial autonomy.
Mr. Chandra Shekar Verma is the current chairman of SAIL, taking charge of the
.
office on
June 11, 2010. Prior to this, he was the director of Bharat Heavy electricals Limited (BHEL).
Mr. Verma is a fellow member of the Institute of Company Secretaries of India (FCS) and of
the Institute of Cost & Works Accountants of India (FTC WA). He is a Commerce post-
graduate with a Master's degree in Business Administration and Bachelor's degree in Law &
Legislatures. Awards received by him during his career are plenty, some of wihhc include
'Best CFO Award' of CNBC-TV 18 in the infrastructure sector for the year 2008-09 and 'Top
Rankers Excellence Award for Best Professional' for the year 2008.
Other Board members include Shri S Machendranathan (Additional Secretary & Financial
Adviser to the Government of India), Prof. Deepak Nayyar, Shri AK Goswami, Dr. Jagdish
Khattar, Prof. Subrata Chaudhuri, Shri Shuman Mukherjee, Shri PC Jha, Shri PK Sengupta,
Shri Upendra Prasad Singh, Shri Anil Kumar Chaudhary, Dr. Isher Judge Ahluwalia, Shri
Sujit Banerjee, Shri Arun Kumar Srivastava, Shri SS Mohanty, Shri HS Pati and Shri TS
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Suresh (as on May, 2012).
Achievementsm
Quality Summit New York Gold Trophy 2007 (International Award for Excellence &
Business Prestige) and Award of Excellence Maintenance for Sumitomo Heavy
Industry & TSUBKIMOTO-KOGIO, Japan won by Alloy Steel Plant, Durgapur.
SAIL was featured in the 2008 list of Forbes Global 2000 companies at position 647.121
Golden Peacock Award for Combating Climate Change 2008 for BSP, Occupational
Health and Safety- 2008 for BSL
National Safety Award to Bhilai Steel Plant announced by the Ministry of Labour &
Employment, Government of India - 2008
Durgapur Steel Plant won the 2nd Prize in the Association of Business Communicators
of India Awards - 2008.
Ispat Bhasha Bharati. the Rajbhasha Journal of SAIL has been awarded with the first
prize under the All India House Journal Award Scheme - 2008-09
Salem Steel Plant received the prestigious Greentech Gold Award in Metal and Mining
Sector - 2008-09.
Golden Peacock Award for Corporate Social Responsibility won by Bbilai Steel Plant
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(BSP) for the third year in a row - 2009.
Rourkela Steel Plant bagged the prestigious Srishti Good Green Governance (G-Cube)
Award - 2009.
Greentech HR Excellence Award bagged by Durgapur Steel Plant 2009
The steel township of Rourkela Steel Plant (RSP) has been ranked 14th in sanitation
and cleanliness by Union Urban Development Ministry - 2009-10
Greentech Safety Gold Award was bagged by Bhilai Steel Plant 2010
The HR Excellence Award by the Greentech Foundation won by Bhilai Steel Plant
2010
SSP has won the prestigious Greentech Silver Award in Training Category of
Greentech FIR Excellence Awards - 2010.
Award for financial and operational strength by Indian Institute of Industrial
Engineering (IIIE)- 2009-10
Golden Peacock Environment Management Award 2011
Randstad Award for HR Practices and Employer Branding under
'Manufacturing Industries' category 2011
Maiden Wockhardt Shining Star CSR Award in the Iron & Steel Sector
category - 2011.
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Salem Steel Plant (SSP) has won the prestigious National Sustainability Award
for the 6th time in
succession and 13th time since inception of the award from Indian Institute of
Metals (JIM)- 2011

Of the 33 Prime Minister's Shram Awards announced for 2010 by the Ministry of Labour,
Government of India, 17 of which went to PSUs, SAIL employees bagged 11 awards. Of the
total number of 76 awardees for the year, 45 belong to SAIL - a remarkable distinction for any
organisation. Maharatna SAIL has received the prestigious Golden Peacock Environment
Management Award for the year 2011. The award, in recognition of SAIL's initiatives and
achievements in the field of environment management, was presented by Union Minister for
Home Affairs Shri P. Chidambaram on 24 June 2011
74 of a total of 128 awardees who have won the prestigious Vishwakanna Rashtriya
Puraskar (VRP) are from SAIL. The 15 out of 28 awards won by SAIL went to our 74
employees for the performance year 2008. Bhilai Steel Plant won 7 such awards involving
36 employees, Bokaro Steel Plant won 6 awards involving 29 employees. Durgapur Steel
Plant and Salem Steel Plant both won 1 award each involving five and four employees
respectively. SAIL employees have bagged 4 out of 5 awards of Class A, which is the highest
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number of A ClaSs awards won by any PSU in India.
The India's union minister of steel, Mr Beni Prasad Verma has said that the Steel Industry in
India which contributes over 2% to the GDP is expected to become the 2nd largest producer
of crude steel in the world by 20l5
Future Plans
SAIL, is in the process of modernizing and expanding its production units, raw material
resources and other facilities to maintain its dominant position in the Indian steel market.
The aim is to increase the production capacity from the base level production of 14.6 MTPA
(2006 07) to 26.2 MTPA of Hot Metal.
The following table shows the increased production of various items prior to and post
expansion.
Item Actual Production Capacity Production Capacity after Expansion
Hot Metal 14.6 Mtpa 26.2 Mtpa
Crude Steel 13.5 Mtpa 24.6 Mtpa
Saleable Steel 12.6 Mtpa 23.1 Mtpa
On the 25th of May, 2012, Steel Authority of India entered into an Memorandum of
Understanding with the West Bengal government and Burn Standard Company Ltd for setting up
of a railway Wagon factory of approximately Rs. 2100 crore. This project will create an
approximate of 75300 jobs


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About Bokaro Steel Plant


Type
State-owned enterprise
public company
Traded as NSE: SAIL
Industry Steel
Founded 1964
Headquarters Bokaro, Jharkhand, India
Products Hot Rolled & Cold Rolled
Bokaro Steel Plant is located in the Bokaro district of Jharkhand. It is the fourth integrated
public sector steel plant in India built with Soviet help. It was incorporated as a limited company
in 1964.
[1]
It was later merged with the state-owned Steel Authority of India Limited (SAIL).
[2]











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Formerly it was known as Bokaro Steel Limited (BSL). Bokaro Steel Plant is hailed as India's
first Swadeshi movement steel plant. Its first blast furnace was started on 2 October 1972.
Currently it houses five blast furnaces with a total capacity to produce 4.5 MT of liquid steel.
The plant is undergoing a mass modernisation drive after which its output capacity is expected
to cross 10 MT. The first shop of Bokaro Steel Plant got the ISO 9001 certification way back in
1994, and its SAIL JYOTI products enjoy a loyal market.
The plant's yearly profit stood at 11.2 billion (US$200 million) for the financial year 200304
and has increased every year since then reaching to 84.26 billion INR in the financial year
200708.

Environment management
As a responsible corporate citizen, BSL has taken effective measures in the area of pollution
control in By-Product Coke Oven Batteries, Battery No: 1 & 2. BSL has taken adequate steps to
check emissions from Coke Ovens and has installed Air cooled self-sealing doors resulting in
significant reduction in door emissions; Doors designed, manufactured and supplied by Simpex
Castings Ltd, Bhilai India.
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COMPANY HISTORY
BOKARO STEEL PLANT
Formerly there was a village named Maraphari deep in the jungles of Chota Nagpur. The closest
village cluster was Chas. Purulia was the closest town and the area was ruled by the Maharaja of
Kashipur. Folklore has it that this area came under Mughal rule by the conquests of Man Singh.
The region was named ManBhoom after him (VeerBhoom and SinghBhoom are the
neighbouring regions also named after him, Veer Man Singh).
This remote place came into prominence when Pt. Jawaharlal Nehru planned to build the first
swadeshi steel plant with the help of the Soviets. The proximity to coal, iron ore, manganese,
and other raw materials had helped in the selection of this place. The steel plant was
incorporated as a limited company on 24 January 1964, and was later merged with SAIL and
came to be known as Bokaro Steel Limited (BSL). The late 1960s and early 1970s saw heavy
construction of the steel plant as well as the township. The first blast furnace started on 2
October 1972.
The Sector III and Camps I and II were the first to come in the township followed by Sectors II,
IX, IV and so on. The first private school came in the form of St. Xavier's School which the
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Jesuits from Hazaribagh built on invitation from the BSL management. The 1980s saw rapid
development of the township with new sectors, schools, parks, zoos and other public amenities.
Township development ceased with the completion of IV/F and IV/G. In all Bokaro Steel City
consists of 12 sectors (sectors VII and X do not exist).
The late 1990s saw sprucing up of the City Park and creation of islands, new schools and the
success of Bokaro's students in all India level competition exams, specially IITs. During this
period Bokaro also emerged as the eastern hub for academics. Bokaro has a cosmopolitan
culture as the population consists of people from all parts of India.
Bokaro is located in the eastern part of India at 23.29N 86.09E
[3]

It is located in picturesque surroundings on the southern bank of river Damodar with Garga, one
of its tributaries meandering along the southern and eastern outskirts of the city. On the north,
the city is flanked by the high ranges of the Parasnath Hills and on the south just beyond the
river Garga, it is enveloped by the Satanpur hillocks.
Two cooling ponds have been built for use in steel making. A dam on river Garga has been built
to supply water to the township as well as the steel plant, but due to ever increasing demand
Tenughat dam is supplementing it.
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Patna, Gorakhpur


Ramgarh,
Hazaribagh

Dhanbad,
Asansol
Bokaro Steel City




Ranchi, Bhubaneshwar

Demographics
As of 2011 India census, under the urban agglomeration of Bokaro Steel City had a population
of 563,417
[4]
making it the 66th largest Urban agglomeration 87th largest city in India and
fourth largest city in Jharkhand . Males constitute 53% of the population and females 47%.
Bokaro Steel City has an average literacy rate of 84.87%, higher than the national average of
74%, with male literacy of 93% and female literacy of 79%.
See also: List of cities in Jharkhand
Economy
The city gets its name from the Bokaro Steel Plant (BSL) which lies at the core of its economy.
It's well aided by the new steel mill Electrosteel Castings Limited and power plants like Bokaro
Power Supply Corporation Private Limited, a joint venture of Damodar Valley Corporation and
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BSL. Some big corporates are also setting up there industries here, such as - ArcelorMittal
12ml/t steel plant, Posco 3ml/t steel plant and SAIL greenfield steel plant of 12 ml/t are coming
soon around the city. In the next five Bokaro alone contribute half of the steel production of the
country. Apart from steel plants there are a Jaypee Cement Plant of 2.1 ml/t and a power plant of
1000 MW is also coming up.
Being an industrial area, agriculture has taken a back seat and is nothing worth mentioning
except small amounts of paddy grown on the fringes of the city by the villagers.

SAIL





Bokaro steel plant
The economy of the Steel City is heavily depended on the steel plant which is the primary
source of income for the employees. After the 2001 downturn, steel prices hardened due to a
huge rise in consumption by China and India. This resulted in large profits by SAIL which
Page 32

crossed a record Rs 6000 crores (USD 1.3 Bn)
[5]
by the end of FY' 06. It has maintained its
profitability since then with a slight dip to Rs 4900 crores (USD 1 Bn)
[6]
in 2011 due to
unfavorable economic conditions of 2011.
Electrosteel Castings Limited
A Kolkata based water pipe manufacturer acquired 2,500 acres (10 km
2
) of land 18 km from the
city and has started its erection of its 2.2 MTPA steel plant. The company has invested close to
Rs 80 Bn (USD 1.6 Bn) on this project which is operational from 2010.
[7][8]
It is located near at
Asanbani village under Sabra Panchayat.
Bokaro Jaypee Cement Limited
Bokaro Jaypee Cement Limited (BOJCL), the second joint venture between the Jaypee group
and SAIL with management control vested in the Company, is incorporated to set up a 2.1
MTPA capacity cement plant at Bokaro Steel City.
[9]

Bokaro Power Supply Co Pvt. Ltd.
Bokaro Power Supply Co Pvt. Ltd. (BPSCL) came into being on 18.9.2001 under Companies
Act 1956 as a part of Steel Authority Of India Limited(SAIL) Business Reconstruction and
Restructuring Plan and with intent to strengthen its core business activity (i.e. steel
manufacturing). SAIL has assigned its entire business as a going concern pertaining to the
Page 33

Capacity of steam generation 660 T/hr. of BSL by the deed of transfer and assignment of
business.
BPSCL become a joint venture of SAIL and Domodar Valley Corporation (DVC) on acquisition
of shares by DVC. DVC and SAIL agreed to participate in the equity share of BPSCL in 50:50
ratio.
BIADA
The primary economy is supplemented by BIADA governing four districts Bokaro, Dhanbad,
Giridih and Koderma situated in Balidih area of Bokaro beside NH-23. It has a wide
manufacturing environment having more than 170 square k.m and constitutes more than 500
S.S.I and large manufacturing enterprises. It manufactures a lot of industrial components for
small and medium scale industries.
Upcoming projects
Bokaro Steel Plant Modernisation
[10]
and extend its capacity from 4.5 MT to 7.5 MT
before 2011. In the same way, further plan for SAIL to extend BSL capacity to 17 MT
before 2020. Apart from this a SAIL Greenfield steel plant is planned to set up before
2015, capacity of 5 MT. So before 2020 BSL total capacity goes up to 22 MT,
approximately double the present capacity (13 MT) of SAIL all Steel Plants.
Page 34

ArcelorMittal
[11][12]
Steel giant ArcelorMittal is looking to set up a 12 million tonne
greenfield plant in Bokaro. The company is now looking for 8,000 acres (32 km
2
) of land
but primarily take 2,500-acre (10 km
2
) of land at Petarwar/Kasmar (in Bokaro district)
just 20 km from City, nearby on NH-23. The company has been allocated 32-35 million
cubic meter of water to be drawn from the Tenughat dam. In another move ArcelorMittal
are to use the spare land of SAIL by establishing a new steel plant of 3-4 ml/ton capacity
of 50:50 JV with PSU in BSL premises itself by the investment of $2.7 billion.
Tata Steel
[13]
- Tata Steel wants to set up a steel plant with a capacity of 2-3 million
tonnes at an investment of up to Rs. 14,000 crore in Bokaro along with SAIL. The jointly
owned plant is proposed to come up on a 1,000-acre (4.0 km
2
) plot of land that belongs
to SAIL.
SAIL-POSCO JV Steel Plant steel minister Sri Virbhadra Singh has announced another
new steel plant for Bokaro as part of a joint venture with Posco and SAIL by using
FINEX technologies for high quality steel. The capacity of the plant will be 1.5 mt,
establish in BSP periphery of 500 acres (2.0 km
2
).
[14]

Page 35

Monnet Ispat & Energy Ltd
[15][16][17]
Monnet, which signed an MoU on February 5,
2003, has identified 1,300 acres (5.3 km
2
) for its project. Monnet Ispat will invest over
Rs 14,000 crore for the project and is also building a 280-mW power plant.
DVC and SAIL
[18]
has a joint venture of 50:50 to extend the capacity of Bokaro power
plant from 500 MW to 1000 MW.
ONGC
[19]
has started exploring Methane Gas for Commercial use from Parbhatpur
(10 km from Bokaro).
SEZ : Jharkhand government's second SEZ after Jamshedpur is planned to set up in
BIADA in 500 acres (2.0 km
2
) land.
Software Technology Park
[20]
- Buoyed by the success of the software technology park
(STPI) in the state capital, the government is planning to set up two more STPIs one
in Jamshedpur and the other in Bokaro. The Bokaro Industrial Area Development
Authority (Biada) to make land available for the projects. It has suggested availability of
land in the Balidih industrial area, where the ancillary units of Bokaro steel plant are
housed.

Page 36

Markets







Classic and idbi, City centre










City centre market,sec.4









Harshvardhan Plaza
The primary economy is supported by the services sector. The city market situated at the center
of the city in Sector 4 has shops selling computer hardware and has computer training institutes,
Page 37

making Bokaro a hub of computer studies for the region. The old Chas bazaar still remains a
cheap wholesale market, and dundi baag is one of the biggest vegetable markets in the region.
Besides these, each sector has its own small shopping center catering to the day to day needs of
the people.
Chas is the wholesale market of district.
Dhundibag is the wholesale market for vegetables/crockery and local and traditional
utensils.
Cooperative colony medical store, beauty parlour.
Sector-9 market is the centre market of sector 9, located northward of city.
Sector-8 (Rai Chowk) Market is the centre market of sector 8, located 5 km from the
city centre.
Sector-6 market is the centre market of sector 6, located 4 km from the city centre.
Laxmi Market - located just 1 km from City Centre is famous for fruits and non veg
items.
Sector-12 Market is the centre market of sector 12, located 6 km from the city centre.
Sector-3 Market is the centre market of sector 3, located 1 km from the city centre.
Sector-5 Market is the centre market of sector 5, located 3 km from the city centre.
Page 38

Kurmidih Market is the centre market of Bokaro industrial area Balidih, located near
NH-23 (next to railway station)
Ramdih More Market is located very near to sector 9 & approx 6 km from city centre ;it
is wholesale market for food & groceries.
Malls and multiplexes
The Bokaro administration has taken a step to turn Bokaro into a shopping hub for the region.
An anti-encroachment drive has been launched in the steel city to make way for malls and
multiplexes. The BSL administration has prepared a blueprint to develop shopping destinations
and multiple-screen theaters.
To give an improved look to the city for the residents, and in a move to turn in into model
township, Bokaor steel bosses decided to build more shopping complexes, malls and
multiplexes in sector IV, sector V, sector XI and in vacant lands behind the residences of Deputy
Commissioner and Inspector General of the coal belt.
Entertainment Projects

The Bokaro Mall - With a cost of Rs 40 crore, The Bokaro Mall-cum-multiplex will
Page 39

soon come up in the heart of the city. The new mall will be established in the 2 acres
(8,100 m
2
) of land with Three Screens of Fame Multiplex, Big Bazaar, Restaurants,
Food Court, Club with facilities of sauna bath, steam bath, gym and swimming pool. J P
Agarwal one of the best architects in Eastern India has designed the multiplex which
may open in 2012. Eyelex multiplex is also one of the upcoming multiplex project in
bokaro.
Raw Materials & Material Handling Plant
The Raw Materials and Material Handling Plant receives, blends, stores and supplies different
raw materials to Blast Furnace, Sinter Plant and Refractory Materials Plant as per their
requirements. It also maintains a buffer stock to take care of any supply interruptions.
Some 9 MT of different raw materials viz. Iron ore fines and lumps, Limestone (BFand SMS
grade), Dolomite lumps and chips, hard Coal and Manganese ore are handled here every year.
Iron ore and fluxes are sourced from the captive mines of SAIL situated at Kiriburu,
Meghahataburu, Bhawanathpur, Tulsidamar and Kuteshwar. Washed coal is supplied from
different washeries at Dugda, Kathara, Kargali and Giddi, while raw coal is obtained from Jharia
coalfields.

Page 40

Coke Ovens & By-product Plant
The Coke Oven Complex at Bokaro converts prime coking coal from Jharia, Dugda and
Moonidih and medium coking coal form Kargali, Kathara and Mahuda, blended with imported
coal, into high quality coke for the Blast Furnaces, recovering valuable by-products like
Anthracene Oil, Benzene, Toluene, Xylene, Light Solvent Naphtha, Ammonium Sulphate and
Extra-hard Pitch in the process. Bokaro is situated in the prime coal belt of the country.
The Coke Oven battery has 8 batteries with 69 ovens each, maintained meticulously in terms of
fugitive emission control, use of phenolic water and other pollution control measures.
Blast Furnaces
Bokaro has five 2000-cubic metre Blast Furnaces that produce molten iron - Hot Metal - for steel
making. Bell-less Top Charging, modernised double Cast Houses, Coal Dust Injection
and Cast House Slag Granulation technologies have been deployed in the furnaces. The
process of iroin-making is automated, using PLC Charging System and Computer Controlled
Supervision System. The wastes products like Blast Furnace slag and gas are either used
directly within plant or processed for recycling / re-use.

Page 41

Steel Melting Shops
Hot Metal from the Blast Furnaces is converted into steel by blowing 99.5% pure Oxygen
through it in the LD converter. Suitable alloying elements are added to produce different
grades of steel.
Bokaro has two Steel Melting Shops - SMS-I and SMS-II. SIVIS-I has 5 IA) converters of 130T
capacity each. It is capable of producing Rimming steel through the ingot route. SMS-II has 2 LD
converters, each of 300 T capacity, with suppressed combustion system and Continuous Casting
facility. It produces various Killed and Semi-Killed steels.
Continuous Casting Shop
The Continuous Casting Shop has two double-strand slab casting machines, producing high
quality slabs of width ranging from 950 mm to 1850 mm. CCS has a Ladle Furnace and a Ladle
Rinsing Station for secondary refining of the steel. The Ladle Furnace is used for homogenising
the chemistry and temperature. The concast machines have straight moulds, unique in the
country, to produce internally clean slabs.
Argon injection in the shroud and tundish nozzle prevent re-oxidation and nitrogen pick-up,
maintaining steel quality. The eddy current based automatic mould level control, unique in the
Page 42

country, gives better surface quality. The air mist cooling and continuous straightening facilities
keep the slabs free from internal defects like cracks. The casters are fully automated
with dynamic cooling, on-line slab cutting, de-burring and customised marking. The shop is
equipped with advanced Level-3 automation and control systems for scheduling, monitoring and
process optimisation.
CCS produces steel of Drawing, Deep Drawing, Extra Deep Drawing, Boiler and Tin Plate
quality. It also produces low alloy steels like LPG, WTCR, SAILCOR and API Grade.
Slabbing Mill
Slabbing Mill transforms ingots into slabs by rolling them in its 1250 mm Universal Four-
High Mill. The rolling capacity of the Mill is 4 MT per annum. The shop has Hot and Cold
Scarfing Machines and 2800 T 2'3 Shearing Machine. Controlled heating in Soaking Pits,
close dimensional accuracy during rolling and hot and cold scarfing help produce defect-free
slabs.
Hot Strip Mill
Slabs from CCS and Slabbing Mill are processed in the state-of-the-art Hot Strip Mill. The fully
automatic Hot Strip Mill with an annual capacity of 3.363 million tonnes has a wide range of
Page 43

products - thickness varying from 1.2 mm to 20 mm and width from 750 mm to 1850 mm. The
mill is equipped with state-of-the-art automation and controls, using advanced systems for
process optimisation with on-line real time computer control, PLCs and technological control
systems.
Walking Beam Reheating Furnaces provide uniform heating with reduction in heat
losses, ensuring consistency in thickness throughout the length. High-pressure De-scaling System
helps eliminate rolled-in scale. Edgers in the roughing group maintain width within close
tolerance. The roughing group has a roughing train of a Vertical Scale Breaker, one 2- high
Roughing Stand and four 4-high Universal Roughing Stands. The finishing group consists of a
Flying Shear, Finishing Scale Breaker and seven 4-high Finishing Stands. Hydraulic
Automatic Gauge Control system in the finishing stands ensures close thickness
tolerance. The Work Roll Bending System ensures improved strip crown and flatness. The
rolling speed at the last finishing stand is between 7.5-17.5 metres per second. The Laminar
Cooling System is a unique feature to control coiling temperature over a wide range within
close tolerance. The Hydraulic Coilers maintain perfect coil shape with On-line Strapping
system. On-line Robotic Marking on the coil helps in tracking its identity.

Page 44

Hot Rolled Coil Finishing
All the Hot Rolled coils from the Hot Strip Mill are received in HRCF for further distribution or
despatch. HR Coils rolled against direct shipment orders are sheared and finished to customer-
required sizes and despatched to customers. The material is supplied as per Indian specifications
and many international/ foreign specifications. The shop has two shearing lines with
capacities of 6,45,000 Tonnes/ year and 4,75,000 Tonnes/ year respectively.
Cold Rolling Mill
The Cold Rolling Mill at Bokaro uses state-of-the-art technology to produce high quality sheet
gauge material, Tin Mill Black Plate and Galvanised Products. Cold rolling is done to produce
thinner gauge strips of very smooth and dense finish, with better mechanical properties than hot
rolling strips. Rolling is done well below re-crystallization temperature without any
prior heating of the material. The products of CRM are used for deep drawing purposes,
automobile bodies, steel furnitures, drums and barrels, railway coaches, other bending and
shaping jobs and coated steels. The CRM complex comprises of two Pickling Lines (including a
high speed Hydrochloric Acid Pickling Line with regeneration facilities), two Tandem Mills, an
Electrolytic Cleaning Line, a Continuous Annealing Line, Bell Annealing Furnaces, two Skin-
Pass Mills, a Double Cold Reduction Mill (DCR), Shearing Lines, Slitting Lines and a packaging
Page 45

and despatch section. The 5-stand Tandem Mill is capable of rolling sheet gauges upto
0.15 mm thickness. It has sophisticated hydraulic Automatic Gauge Control, computerised
mill regulation and optimisation control.
Hot Dip Galvanising Complex
The Hot Dip Galvanizing Complex integrated with the CRM produces zinc-coated Cold Rolled
strips resistant to atmospheric, liquid and soil corrosion. The Continuous Coil Corrugation Line
in the HDGC produces corrugated sheets and the Galvanised Sheet Shearing Line produces
galvanised plain sheets for a variety of applications. The first shop of Bokaro Steel to get the
ISO-9001 certification way back in 1994, this complex has maintained a high-standard of
coating quality and its SAII,NOTI branded products enjoy a loyal market.
This complex made certain innovations for higher productivity to help re, build earthquake-
ravaged Gujarat.

Services - a valuable support network
The service departments like Traffic, Oxygen Plant, Water Management and Energy
Management provide invaluable support to this gigantic plant. Bokaro Steel has a vast
Page 46

networked of railway tracks and over 40 diesel locos to smoothly run its operations. The Oxygen
Plant provides Oxygen, Nitrogen and Argon for processes like steelmaking and annealing. Water
Management looks after the huge water requirements of the plant and the township, providing
different grades of water and taking care of recycling needs. Energy Management juggles the
supply and demand of by-product gases and their demand as process fuel.
Maintenance Departments
Bokaro has centralised maintenance departments for large-scale electrical and mechanical
maintenance, in addition to shop-based maintenance wings for running repairs and
maintenance. These facilities are capable of executing massive capital repairs, supported by the
fabrication facilities of the auxiliary shops.
Auxiliary Shops
To meet its needs for maintenance and repairs, Bokaro has a cluster of engineering shops such as
Machine Shop, Forge Shop, Structural Shop, Steel Foundry, Ingot Mould Foundry, Cast Iron and
Non-Ferrous Foundry, Electrical Repair Shop and Power Facilities Repair Shop in addition to
shop-specific Area Repair Shops. Most of the repairs and maintainance requirements of the plant
are met in house.
Page 47

The auxiliary shops and maintenance wings of Bokaro Steel, aided by in-house design teams, have
executed a number of highly sophisticated procurement-substitution, productivity enhancement and
quality improvement jobs, saving revenues and enhancing equipment availability.
The expertise and operational scale of these departments, along with the service departments,
makes Bokaro a truly integrated plant, housing many virtual enterprises within Bokaro Steel.
BOKARO STEEL PLANT PRODUCT BASKET
Mill Capabilities
Shop Products Facility Annual
Capacity
(000
Tonnes)
Thickness
range
(mm)
Width range
(mm)
Length
(metre)
HSM HR Coils/Sheets/
Plates
Continuous Mill 3955 1.6 16 900 -1850 -
HRC
F
HR Sheets/ Plates Shearing Line I - 5 10 1800 2.5 12
- HR Sheets/ Plates Shearing Line II - 1.6 4 1500 1.54.5
- HR Coil Slitting Line - - - -
CRM - - 1660 - - -
- CR Coils/ Sheets CRM I complex - 0.63-2.5 700 1850 -
Page 48

CR Coils/ Sheets CRM II complex - 0.63 1.6 650 1250 -
CR Coils/ Sheets,
TMBP
DCR Mill 100 0.22 0.8 650 1250 -
- GP Coils & HDGL 170 0.3 1.6 650 1250 -
Special Grade of Steel
Special Steel Grades Application
SAE 1541 Automobile Industry
MC 11 Cycle Industry
SPC 370/390 Cycle Industry
C 15 Cycle Industry
API X 42, X-46,X-52, X-56, X-60 (SAILAPI) Pipe Line
SAILCOR (corrosion resistant) Railways
SAILMEDSi (Medium Silicon Steel) Heavy Electrical Winding
SAILPROP Propeller Shaft
Strapping Steel (for internal use only) Strapping Finished Products
Full-hard Galvanised Coil Extra hard roof of houses
Cold Rolled Medium Electrical Steel Transformer core
Extra-low Carbon Extra Deep Drawing (HR &
CR)
White goods
Page 49

DMR 249A Grade Steel Defence Research Development Organisation
(DRDO) for fabrication of Submarine parts
(import substitution)
E460/E500/E550 Floating bridges for Defence. For M/S BEML;
for making. (import substitution)
IS8500 Fe 540B high strength low alloy steel
with UTS value in excess of 540 Mpa
Kolkata fly-over
Low Carbon, Low Manganese, High Strength
Structural Steel without microalloying (Carbon
0.10%)
Structural purposes. Thermo-mechanically
Controlled Processing.)

By Products
Nitration-grade Benzene
Nitration-grade Toluene
Antrhracence Oil
Extra-hard Pitch
Pitch Creosote Mixture
BF Granulated Slag









Page 50


BRIEF ON BOKARO STEEL PLANT

COMPANY PROFILE

Bokaro Steel Plant (BSL), is the symbol of countrys efforts towards augmentation of steel
production & indigenisation. It has made definite contribution to the economy of our country.
Agreement was signed with USSR on 25
th
Jan. 1965 for establishing a 1.7 MT capacity steel
plant at Bokaro to be expanded later to 4.0 MT capacity. Over the years, BSL has grown in
strength reaching increased levels of production and quality.
Bokaro Steel Plant is an integrated Steel Plant which incorporates all the classical features of
Iron & Steel making from Coke Ovens to Cold rolling Mills.
With a saleable steel production capacity of 3.78 million tones, the plant has been modernized
with continuous casting facilities and a state-of-the-art Hot strip mill for producing quality steels
of international standards. A range of special steel products like DMR 249A, E-460/500/550, IS-
8500 Fe540B, SAILCOR, SAILPROP, SAILMEDSi, SAILRIM, API grade steel, HRNO,
SAILMA, WTCR, BSL-46 for auto sector etc. have been introduced after modernization. All the
units of the plant from steel making to the finished product are accredited to ISO:9002 QMS
standard.

Page 51

ENERGY CONSUMPTI ON
In the present scenario of global cost competitiveness in steel industry the challenge can be met
by finding solutions to reduce energy consumption, which is one of the major cost factor.
Energy consumption has reduced to an appreciable level of 7.094 Gcal/tcs in 2006-07 mainly
through optimization and improvement in existing processes & equipment as well as
introduction of new technologies. To achieve the international levels of energy consumption ie
4.5 to 5.5 Gcal/tcs attained by developed countries continuous efforts are made in this direction.
The basic energy input ( purchased) to the steel plant are
Coking coal ( both low ash imported coal and indigenous coal) for producing coke
in Coke Oven.
Blast Furnace grade coke purchased to supplement shortage of BF coke generated in
Coke Oven.
Imported low ash non coking coal for injection in Blast furnace
Power purchased from DVC and BPSCL.
Steam purchased from BPSCL ( both HP & LP) to meet requirement at various
process.
Diesel for mobile equipments, locos etc.

Page 52

The basic energy input ( purchased) to the steel plant and their contribution to energy
bill with respect to cost of production is given in following table.

SN Parameters Unit 04-05 05-06 06-07
1.0 Consumption of basic energy
1.1 Metallurgical coal Kg/T of crude steel 962.6 922.7 938.1
1.2
Coal for injection in Blast
furnace
Kg/T of hot metal 9.6 7.3 8.7
1.4 Purchase Power Kwh/T of crude steel 435.4 415.3 424.7
1.6 Total Energy Bill Rs. In crores 2423.08
2.0 Total Manufacturing cost -do- 5469.71
3.0
Contribution of Energy bill
over production cost.
% 44.3

There has been an astronomical rise in the price of inputs . To circumvent this adverse situation,
technologies need to be adopted like fuel injections & other energy reducing measures like
waste heat utilization systems etc


ENERGY CONSERVATI ON COMMI TMENT , POLI CY & SET UP

Energy Conservation is continuous and on-going process. It has been a top management
priority since last two decades.
The structured approach to achieve Excellence in Energy Conservation and management is
based on
Page 53

Technological change to adopt energy efficient process
Retrofitting and modification of existing process to make it more efficient.
Minimize noise level through improved house keeping.
Monitoring shop wise energy parameters at micro and macro level.
Bokaro Steel has established a well organized Energy Management Department since
inception for sustained and systematic approach towards efficient utilization of energy.
A separate energy conservation cell comprising 4 executives, 21 skilled and 08 semi
skilled workers is operating under Energy Management department for monitoring and
controlling all energy parameters in close association with all units of the plant.
The energy cell is headed by Assist. General Manager exclusively for monitoring energy
consumption of the plant.
The structure of the energy cell is given below.











EXECUTIVE DIRECTOR (WORKS)
GM I/C (SERVICES)
GM (EMD&ECD)
DGM (ENERGY)
SR. MGR. (MILLS) DM (IRON & STEEL ZONE)
Page 54

Energy schemes completed in 2006-07

1. COKE OVEN

Dry gunniting in 238 ovens to plug cross leakages and increase CO gas yield.
Hydrojet cleaning of oven doors @ 200 nos ovens /day
Use of steam in place of power driven exhauste
Movement of pusher car is optimized by 5-2 series charging in battery no. 6 & 7.
2. SINTERING PLANT

Stopping of hammer crushers during idle hours.

Front hearth beam of machine 3 changed to reduce specific heat consm.

3. BLAST FURNACES

Use of mixed gas in stove heating and increase of blast temperature upto 1000 C.

Increase of surface area of stove checker work by Hoogoven type design in stove 1 of BF
4 and stove 2 & 3 of Blast furnace no 3.

4. SLABBING MILL

Complete cleaning of 13 nos. of metallic recuperators in pits of Slabbing Mill.

Adjustment in setting of optimum air/gas ratio in all running pits round the clock.

5. COLD ROLLING MILL

New HCl regeneration plant has been provided with all Energy efficient motors.

Page 55

Installation of 18 KW motors in place of 24 KW motors in 92 no. of bases in Annealing
furnaces.

6. GENERAL & UTILITIES

Reconditioning of 10 nos. of steam traps in ODPL.

Commissioning of VSAT equipments at SLCC for bi-directional data transfer
between BSL, EREB, DVC for effective power distribution.

7000 m2 of damaged insulation in steam lines have been changed during the year.
Repair of 12.5 Km length of damaged water line.
Modernisation of Gas control system with remote operation of some strategic throttles.

ENERGY CONSERVATI ON ACHI EVEMENTS

As a result of the above energy conservation measures taken and optimization of the
operating & maintenance practices, there was a marked improvement in all the major energy
parameters. The following table shows the major parameters of the last three years.

The status of energy parameters in the last three years
Sl.
No
Parameters Unit Year
2004-05 2005-06 2006-07
1.0 Sp. Heat consumption
-Coke Oven Gcal/T dry coal 0.591 0.592 0.583
-Sinter Plant Gcal/T gross sinter 0.024 0.024 0.025
-Blast Furnace Gcal/T slab rolled 0.580 0.573 0.577
-Hot Strip Mill Gcal/T slab rolled 0.446 0.450 0.479
-Cold Rolling Mill Gcal/T annealed coil 0.332 0.333 0.367
Page 56

2.0 Sp. Power Consumption
-Coke Oven Kwh/t gross coke 26.9 27.8 27.5
-Sinter Plant Kwh/T gross sinter 48.5 45.6 46.6
-Steel Melting shop Kwh/T crude steel 23.1 30.8 31.2
- Hot Strip Mill Kwh/T coil + plate 82.7 82.0 80.4
-Cold Rolling Mill Kwh/T CR Product 153.2 156.2 150.5
3.0 Coke Rate Kg/T hot metal 531 523 520
4.0 Coke Oven Gas yield Nm3/T dry coal 321.4 314.4 324.6
5.0 Overall Energy
Consumption
Gcal/T of crude steel 7.233 7.098 7.094



ENERGY CONSERVATI ON PLANS AND TARGETS

Future energy conservation plan are :

Use of coal bed methane gas.

Initiation of Clean Development Mechanism projects

Provision of BF Gas line for Captive Power Plant.

Upgradation of Gas mixing & boosting station with PLC based Control system & its
linking with Gas control system.

The target for Energy consumption for 2007-08 is 6.88 Gcal/Tcs

SAFETY

Bokaro Steel Plant accords first and foremost priority to safety and health of its human
resource. A full fledged Safety Engineering Department headed by General Manager (Safety&
fire) is operating in the plant to inspect, monitor and ensure implementation of safe working of
Page 57

various plant units with trained safety officers. Regular medical check up of employees is being
done.
A separate gas safety section working under energy management department provide gas
safety assistance to all gas hazardous jobs. Round the clock monitoring of safe working is done
during capital repair, shutdown and special repair jobs.
5 Star Health & Safety Management System was first introduced in the year 96-97 and
spread within the various units of plant. It has been implemented in Battery 1 & 2 , Benzol
recovery plant and desulphurisation unit of Energy management department in the year 1999,
Steel Melting Shop no. 1(Pit Side) in 2000 , Slabbing Mill (soaking Pit area) in 2001 and Blast
furnace Gas cleaning plant no 3 &4 in 2002. BSL has a safety policy under the signature of MD
and it serves as a managements commitment to safety.
Designated departmental safety officers(DSO) of all the departments are made responsible
for monitoring the safety activities in the dept. who also co-ordinates with safety Engineering
Dept. in various activities linked to safe working.







Page 58


AWARDS:

Bokaro Steel Plant has bagged the following awards:

Second National Energy Conservation award 2006 for excellence in Energy
Conservation & Management in 05-06.

ISO 9001.2000 Quality Management System certification for the whole of Bokaro
Steel plant.

ENVI RONMENT MANAGEMENT

The concern for Environment at Bokaro Steel Plant is of paramount importance since the
construction of the plant. All process equipments are provided with pollution control systems.
Bokaro Steel has spent Rs. 335 crores in the last decade on pollution control projects. The plant
environment is monitored by an independent Environment Control Department manned by
qualified & trained people in the field. The plant has been provided with the latest
environmental protection system as regards to air, water, noise and solid waste pollution with
state of art laboratory functioning round the clock. The measures taken for improvements of
environment are as follows:
Effluent discharges from all three outlets of the Plant are maintained within stipulated
norms.
Emissions from all the stacks except from Sinter exhaust are within stipulated norms.
Page 59

Battery cyclones are going to be replaced by ESP.
Ambient Air quality in & around the township remained within the stipulated norms.
100% use of processed LD slag as rail ballast for Internal Railway Track replacing stone
ballast.
Use of LD slag in fly ash dykes.
Fugitive emission (PLD, PLL & PLO) in all batteries are well below the stipulated norm
except PLD of battery no. 1.
Coke oven battery # 6 commissioned after cold repair.
Heating started after re-building of Coke oven battery #5 with latest on line Pollution
control equipments.
Commissioning of continuous stack monitoring system in coke oven battery no. 3 & 5.
Ammonia in BOD plant outlet has come within norm.
Water consumption has been reduced to 4.83 cu. M / tcs
Hazardous waste pit completed & started functioning.
On line CHSGP in BF4 commissioned.





Page 60


Page 61



































Page 62



































Page 63



































Page 64

Capital Budgeting


Meaning

The term Capital Budgeting refers to the long-term planning for proposed capital outlays or
expenditure for the purpose of maximizing return on investments. The capital expenditure may be :

(1) Cost of mechanization, automation and replacement.

(2) Cost of acquisition of fixed assets. e.g., land, building and machinery etc.

(3) Investment on research and development.

(4) Cost of development and expansion of existing and new projects.

DEFINITION OF CAPITAL BUDGETING

Capital Budget is also known as "Investment Decision Making or Capital Expenditure
Decisions" or "Planning Capital Expenditure" etc. Normally such decisions where investment of
money and expected benefits arising therefrom are spread over more than one year, it includes both
raising of long-term funds as well as their utilization. Charles T. Horngnen has defined capital
budgeting as "Capital Budgeting is long-term planning for making and financing proposed capital
outlays."


Page 65

In other words, capital budgeting is the decision making process by which a firm evaluates the
purchase of major fixed assets including building, machinery and equipment. According to
Hamption, John. 1., "Capital budgeting is concerned with the firm's formal process for the
acquisition and investment of capital."

From the above definitions, it may be concluded that capital budgeting relates to the evaluation
of several alternative capital projects for the purpose of assessing those which have the highest rate
of return on investment.

Importance of Capital Budgeting

Capital budgeting is important because of the following reasons :

Capital budgeting decisions involve long-term implication for the firm, and influence its risk
complexion.

Capital budgeting involves commitment of large amount of funds.

Capital decisions are required to assessment of future events which are uncertain.

Wrong sale forcast ; may lead to over or under investment of resources.

In most cases, capital budgeting decisions are irreversible. This is because it is very difficult
to find a market for the capital goods. The only alternative available is to scrap the asset, and
incur heavy loss.
Page 66

Capital budgeting ensures the selection of right source of finance at the right time.

Many firms fail, because they have too much or too little capital equipment.

Investment decision taken by individual concern is of national importance because it deter-
mines employment, economic activities and economic growth.


Objectives of Capital Budgeting


The following are the .important objectives of capital budgeting:

(1) To ensure the selection of the possible profitable capital projects.

(2) To ensure the effective control of capital expenditure in order to achieve by forecasting the
long-term financial requirements.

(3) To make estimation of capital expenditure during the budget period and to see that the
benefits and costs may be measured in terms of cash flow.

(4) Determining the required quantum takes place as per authorization and sanctions.

(5) To facilitate co-ordination of inter-departmental project funds among the competing capital
projects.

(6) To ensure maximization of profit by allocating the available investible.

Principles or Factors of Capital Budgeting Decisions

A decision regarding investment or a capital budgeting decision involves the following
principles or factors:

Page 67

(1) A careful estimate of the amount to be invested.

(2) Creative search for profitable opportunities.

(3) A careful estimates of revenues to be earned and costs to be incurred in future in respect of
the project under consideration.

(4) A listing and consideration of non-monetary factors influencing the decisions.

(5) Evaluation of various proposals in order of priority having regard to the amount available
for investment.

(6) Proposals should be controlled in order to avoid costly delays and cost over-run

(7) Evaluation of actual results achieved against those budget.

(8) Care should be taken to think all the implication of long range capital investment and
working capital requirements.

(9) It should recognize the fact that bigger benefits are preferable to smaller ones and early
benefits are preferable to latter benefits.

Capital Budgeting Process

The following procedure may be considered in the process of capital budgeting
decisions :

(1) Identification of profitable investment proposals.

(2) Screening and selection of right proposals.

(3) Evaluation of measures of investment worth on the basis of profitability and
uncertainty or risk.
Page 68


(4) Establishing priorities, i.e., uneconomical or unprofitable proposals may be rejected.

(5) Final approval and preparation of capital expenditure budget.

(6) Implementing proposal, i.e., project execution.

(7) Review the performance of projects.

Types of Capital Expenditure

Capital Expenditure can be of two types :

(1) Capital expenditure increases revenue.

(2) Capital expenditure reduces costs.

(1) Capital Expenditure Increases Revenue: It is the expenditure which brings more revenue
to the firm either by expanding the existing production facilities or development of new
production line.
(2) Capital Expenditure Reduces Costs: Such a capital expenditure reduces the cost of present
product and thereby increases the profitability of existing operations. It can be done by
replacement of old machine by a new one.

Types of Capital Budgeting Proposals

A firm may have several investment proposals for its consideration. It may adopt after
considering the merits and demerits of each one of them. For this purpose capital expenditure
proposals may be classified into :


Page 69

(1) Independent Proposals

(2) Dependent Proposals or Contingent Proposals

(3) Mutually Excusive Proposals

(1) Independent Proposals: These proposals are said be to economically independent which
are accepted or rejected on the basis of minimum return on investment required. Independent
proposals do not depend upon each other.

(2) Dependent Proposals or Contingent Proposals: In this case, when the acceptance of one
proposal is contingent upon the acceptance of other proposals. it is called as "Dependent or
Contingent Proposals." For example, construction of new building on account of installation of new
plant and machinery.

(3) Mutually Exclusive Proposals: Mutually Exclusive Proposals refer to the acceptance of
one proposal results in the automatic rejection of the other proposal. Then the two investments are
mutually exclusive. In other words, one can be rejected and the other can be accepted. It is easier for
a firm to take capital budgeting decisions on such projects.

Page 70

Methods of Evaluating Capital Investment Proposals
There are number of appraisal methods which may be recommended for evaluating the
capital investment proposals. We shall discuss the most widely accepted methods. These methods
can be grouped into the following categories
I. Traditional Methods :
Traditional methods are grouped in to the following
(1) Pay-back period method or Payout method.
(2) Improvement of Traditional Approach to Pay-back Period Method.
(a) Post Pay-back profitability Method.
(b) Discounted Pay-back Period Method.
(c) Reciprocal Pay-back Period Method.
(3) Rate of Return Method or Accounting Rate of Return Method. Time
Adjusted Method or Discounted Cash Flow Method
Time Adjusted Method further classified into
(I) Net Present Value Method.
(2) Internal Rate of Return Method.
(3) Profitability Index Method.
I. Traditional Methods
(1) Pay-back Period Method : Pay-back period is also termed as "Pay-out period" or
Pay-off period. Pay out Period Method is one of the most popular and widely recognized
traditional method of evaluating investment proposals. It is defined as the number of years
required to recover the initial investment in full with the help of the stream of annual cash flows
generated by the project.
Page 71

Calculation of Pay-back Period : Pay-back period can be calculated into the following two
different situations
(a) In the case of constant annual cash inflows.
(b) In the case of uneven or unequal cash inflows.
(a) In the case of constant annual cash inflows : If the project generates constant cash flow
the Pay-back period can be computed by dividing cash outlays (original investment) by annual
cash inflows. The following formula can be used to ascertain pay-back period


Pay back Period =




Illustration: 1
A project requires initial investment of Rs. 40,000 and it will generate an annual cash
inflows of Rs. 10,000 for 6 years. You are required to find out pay-back period.

Solution :
Calculation of Pay-back period :

Pay back Period =




=

Pay-back period is 4 years, i.e., the investment is fully recovered in 4 years.

(b) In the case of Uneven or Unequal Cash Inflows: In the case of uneven or unequal cash
inflows, the Pay-back period is determined with the help of cumulative cash inflow. It can be
calculated by adding up the cash inflows until the total is equal to the initial investment.


Page 72

Illustration: 2

From the following information you are required to calculate pay-back period :
A project require initial investment of Rs. 40,000 and generate cash inflows of Rs. 16,000, Rs,
14,000, Rs. 8,000 and Rs. 6,000 in the first, Second, third, and fourth year respectively.

Solution :
Calulation Pay-back Period with the help of Cumulative Cash Inflows
Year Annual Cash Inflows Rs. Cumulative Cash Inflows Rs.
1
2
3
4
16,000
14,000
8,000
6,000
16,000
30,000
38,000
44,000

The above table shows that at the end of 4th years the cumulative cash inflows exceeds the
investment of Rs. 40,000. Thus the pay-back period is as follows :

Pay back Period = 3Years +

= 3Years +

= 3.33 Years









Page 73

Chapter 1


Bokaro Steel Plant:
Bokaro Steel Plant was fourth integrated plant in the public sector. The company starts taking shape
in 1965 in collaboration with the Soviet Union. Bokaro Steel Plant (BSL) was incorporated in 1964
and later merged with SAIL as a subsidiary company and then as a unit under the Public Sector Iron
& Steel Companies Act 1978.





It was the first Swadeshi Steel Plant built with maximum equipment and material. Its first Blast
Furnace was started on 2
nd
October, 1978 and its first phase of 1.7 MT Ingot Steel was completed on
26
th
February, 1978 with the commissioning of its third Blast Furnace. And in 90s it was upgraded
from 4 MT to 4.5 MT of liquid Steel.
The new feature added in the modernization of SMS-II includes:
Two twin-stand slab caster along with a Steel Refining Unit
The modernization of its Hot Strip Mill adds a new feature like:
High Pressure de-scalars
Work rolls bending
Hydraulic automatic gauge control
Page 74

Quick work roll change
Laminar cooling
And, its less efficient Pusher Type Furnace were replaced by new Walking Beam Reheating
Furnace.
Two of its existing Hydraulic Coiler was removed by a new improved Hydraulic Coiler. With the
modernization and completion of Hot Strip Mill, Bokaro Steel Plant starts producing top quality of
hot rolled products and which was accepted in the Global Market.
Bokaro Steel Plant is designed to produce flat products like:
Hot/Cold Rolled Coils
Hot/Cold Rolled Sheets
Hot Rolled Plates
Tin Mill Black Plates
And, Galvanized Plain and Corrugated Sheets
Bokaro Steel Plant has provided a strong raw material to many modern Engineering Industries such
as Automobiles, Pipe and Tube, LPG Cylinder, Barrel and Drum Producing Industries.


Page 75

Upgradation of Blast Furnace-2 at BSL:
Bokaro Steel Plant is equipped with 5 Blast Furnaces, BF Nos. 1 to 5. The furnaces are having
identical hearth diameter of 9.75m and useful volume of 2000 cum. The Plant was originally
designed for 1.7 MT of Crude Steel, which has progressively increased to 4.5 MT.
As per the Corporate Plan-2012 of SAIL, the hot metal production from the existing 5 Blast
Furnace is targeted at 6.5 Mtpa in 2012, up from 4.7 MT in 2005-06. This target is planned to be
achieved through upgradation of the Blast Furnace to improve productivity levels, introduction of
auxiliary fuel injector in all blast furnaces, revamping of turbo blowers, installation of cast house
slag granulation plants etc. As per plan, the upgradation of Blast Furnaces is to be carried out during
the extended capital repairs shutdown period of Blast Furnace No.-2 was commissioned on
12.04.1976. The last Capital Repair of BF No.-2 was carried out between 16.06.1996 to 15.08.1996.
The furnace is due for extended Category II repair in the year 2007-2008 and BSL has decided to use
this opportunity to upgrade the furnace so that the reportedly cost of capital repair of around Rs.50
crore can be saved and the shut-down period can be minimized.



Page 76










The present proposal envisages Rebuilding of Blast Furnace No. 2 with working volume of
furnace at 2250 m as against the current capacity of 1758 m. The major technological facilities
existing in BF No.2 include bell less top charging system with PLC control, high top pressure
operation, ceramic pad in hearth with carbon blocks in the periphery, under hearth cooling with air,
twin cast houses 180 apart, hot blast stoves system of Russian design, PLC controlled conveyorised
stock-house having sinter & coke screening facilities, etc.
The proposed rebuilding would enable the Blast Furnace-2 to increase its productivity at an
envisaged level of 2.0 t/m/day from the base level of 1.35 t/m/day (actual 2005-06)resulting in
higher production of 4500 t/day of Hot Metal from the base level production of 2373 t/day. The hot
blast temperature would be 1200C from 909C with reduction in coke consumption of 385 kg/thm
Page 77

from 543 kg/thm of base level with use of CDI coal injection of 135 kg/thm. The technological
parameters and design features of the existing BF No.2 vis--vis upgradated BF No.2 are as under:
Parameters Existing (2005-06) After Upgradation
Working Volume (cum) 1758 2250
H.M. Production (tpd) 2373 4500
Coke Rate (kg/thm) 543 385
Furnace Top Pressure (kg/cm) 0.95 2.0
Blast Volume (NM/min) 2928 3065 (with
6% Oxygen enrichment)
Hot Blast Temp. (C) 909 1200
Hot Blast Pressure (kg/cmmax.) 2.11 3.5






Page 78

2. Objective and Scope
Objective of the Studies:
To describe the organizational profile of Bokaro Steel Plant (BSL).
To get familiarity with the various components of Capital Budgeting in BSL.
To discuss the importance of the Capital Budgeting management.
To find out the difference between the theoretical and practical aspect of Capital Budgeting
management.
Determination of proposal and investments, inflows and outflows in BSL.
To evaluate the investment proposal made by the company.
To summarize and to suggest for the better investment proposal by using capital budgeting
techniques.
To study and come out with any solution for improvement of Capital Budgeting management
at BSL
The sole objective of this project was to analyze the Capital Budgeting on Blast Furnace-2 at
Bokaro Steel Plant.
Page 79

To assess the significance of Capital Budgeting by selecting a few important parameters such
as:
Net Present Value (NPV)
Internal Rate of Return (IRR)
Profitability Index (PI)
Payback Period (PB)
Discounted Payback
Average Rate of Return (ARR)
Scope of the Studies:
The study is limited to Capital Budgeting decision of Blast Furnace-2 in Bokaro Steel Plant.
The findings can be used by other to understand the proposal and its attractiveness to permit
financial and commercial analysis.
This influence the firm growth in long term consequences capital investment decision that
what the firm can do in future.


Page 80

3. Theoretical Perspective
Capital Budgeting:
Capital Budgeting is a planning process which is use to determine the Long Term Investment of an
Organization such as investment in new machinery, replacement of machineries, opening of a new
plant, innovation of new product and research development projects.
Importance of I nvestment Decisions:
They influence the firms growth in long run,
They are irreversible or reversible at substantial loss.
Types of I nvestment Decisions:
Expansion of Existing Business:
A company may add capacity to its existing product lines to expand existing operation.
Replacement and Modernization:
The main objective of modernization and replacement is to improve operating efficiency and
reduce cost.
Another useful ways of Classify Investment:
Mutually Exclusive Investments:
Mutually Exclusive Investments serves the same purpose and competes with each other.
Independent Investment:
Independent Investment serves different purposes and do not compete with each other.
Contingent Investment:
Contingent Investments are dependent projects; the choice of one investment necessitates
undertaking one or more other investment.
Page 81

Evaluation Criteria:
They are classified in two categories:
Discounted Cash Flow (DCF) Criteria:
Net Present Value (NPV)
Internal Rate of Return (IRR)
Profitability Index (PI)
Non-Discounted Cash Flow Criteria:
Payback (PB)
Discounted Payback
Accounting Rate of Return (ARR)
Discounted Cash Flow (DFC) Criteria:
Net Present Value (NPV):
The difference between PV of cash flows and PV of cash outflows is equal to NPV; the
firms opportunity cost of capital being the discount rate.
Rules:
Accepted if NPV > 0 (i.e. NPV is Positive)
Rejected if NPV < 0 (i.e. NPV is negative)
Project may be accepted if NPV = 0
Internal Rate of Return (IRR):
The discount rate which equates the present value of an investments cash inflows and
outflows is its Internal Rate of Return.
Rules:
Page 82

Accepted if IRR > k
Rejected if IRR < k
Project may be accepted if IRR = k
Profitability Index (PI):
The ratio of the present value of the cash flows to the initial outlay.

Rules:
Accepted if PI > 1.0
Rejected if PI < 1.0
Project may be accepted if PI = 1.0
Non-Discounted Cash Flow Criteria:
Payback:
The number of years required to recover the initial outlay of the investment.
Rules:
Accepted if PB < Standard payback
Rejected if PB > Standard payback
Discounted Payback:
The number of years required in recovering the cash outlay on the present value basis is the
discounted payable period. Except using discounted cash flows in calculating payback, this
method has all the demerits of payback method.

Page 83

Average Rate of Return:
An average rate of return found by dividing the average net operating profit [EBIT*(1-T)]
by the average investment.
Rules:
Accepted if ARR > minimum rate
Rejected if ARR < minimum rate.










Page 84

4. Methodology and Procedure of Work
Methodology:
The data which I have collected for making this project is a combination of both primary data and
secondary data.
Primary Data:
The information collected directly without any reference. It was mainly through interactions with
concerned officers individually. Some of the information is obtained with personal observation.
These sources include:
Guidance given by the project guide, Mr. R.B.Sharma, Asst. Manager (F&A)
Interaction with the various department Managers of BSL
Secondary Data:
The data is from the number of books, records, annual reports published by the company, business
magazines and business news papers.
Collection of data from annual records and internal published books
By Journals and magazines
Page 85

Annual Report of the Company.
Work Procedures:
1-2 weeks: In these two weeks I got acquainted through the existing work which has been
done in the Finance & Accounts department and have a fair bit of idea on the above
mentioned topic so that I am acquainted with all the aspects which need to be covered in
order to have a better insight on the given topic.
3-5 weeks: In this period I got the financial budgeting data of upgradation of Blast Furnace-2
to study and analyze it.
6-8 weeks: In this period I had done analysis of all the data collected, interpret them and
reached to a conclusion. Also with the help of my Project Guide, I would start preparing the
final report.






Page 86

Analysis of Data
The proposed rebuilding would enable the Blast Furnace-2 to increase its productivity at an
envisaged level of 2.0 t/m/day from the base level of 1.35 t/m/day (actual 2005-06) resulting in
higher production of 4500 t/day of Hot Metal from the base level production of 2373 t/day. The hot
blast temperature would be 1200C from 909C with reduction in coke consumption of 385 kg/thm
from 543 kg/thm of base level with use of CDI coal injection of 135 kg/thm.
Capital Cost Estimate (Summary):
Table-1
Base Date: 3
rd
Qtr. 2006 FE parity: 1 euro= Rs.58.54

Sl. No.

Item

FC (Cr.)

LC (Cr.)

Total (Cr.)

1
2
3
4
5
6
7
8
9
10

Equipment
Structures
Refractories
Civil Work
Erection & Comm
Engg. & Constn.
Freight & Insurance
Taxes & Duties
Others (Training)
Contingencies

97.55

29.38


23.70
7.62

0.97
7.96

94.43
52.71
26.50
23.45
41.25
37.29
15.23
99.81
0.25
19.55

191.98
52.71
55.88
23.45
41.25
60.98
22.85
99.81
1.22
27.51

11

Total Plant Cost

167.17

410.47

577.64

Page 87

12 IDC 15.16

13

Capital Cost





592.80

Therefore, Total Capital Cost = Rs.592.80 (Cr.)
Gross Margin Calculation:
Table-2

Sl. No.

Particulars

Unit

Base Case

Proposed Case

I.

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

II.

1.
2.
3.
4.

Technical Parameters:

Working Volume of Furnace
No. of working days
Oxygen enrichment
BF Productivity (Working Volume)
Hot Metal Production
Addl. H M Prodn. w.r.t base case
Equivalent Pig Production (Y=93%)
Coke rate (Skip)
Savings in coke consumption
CDI coal injection
Avg. power generation from TRT
Steam consumption

Benefits:

Contribution on additional Pig Iron
Saving due to less Coke consumption
Addl. Power generation from TRT
Saving in steam cons.



cu m
days
%
t/m/day
000t
000t
000t
Kg/thm
000t/yr
Kg/thm
MW
tph

Unit

Rs. Cr.
Rs. Cr.
Rs. Cr.
Rs. Cr.



1758
350
Nil
1.35
823


543



4.66

Rate

4255
9350
3177
292



2250
350
6%
2.00
1575
752
699
385
240
135
8.08
0

Amount

297.56
232.66
21.47
1.14
Page 88




Total Benefits

Rs. Cr.



552.84

III.

1.
2.
3.
4.
5.
6.
7.

Addl. Expenditure:

CDI coal @135 kg/thm
Electricity (@27 kwh/tpci)
Nitrogen @1900 nm/hr (CDI+TRT)
Oxygen consumption - 13000 nm/hr
CO gas 8695 nm/hr (CDI+BF+TRT)
Make-up water
Repair & Maint. @2.5% of plant cost



Rs. Cr.
Rs. Cr.
Rs. Cr.
Rs. Cr.
Rs. Cr.
Rs. Cr.



6700
3177
1290
3130
357
1000



156.70
2.01
2.06
34.18
10.95
0.10
14.44



Total Addl. Expenditure

Rs. Cr.



220.45

IV.

GROSS MARGIN (II-III)

Rs. Cr.



332.39

I nitial Data:
Table-3
Year Cash Inflow
(Cr.)
Interest
(Cr.)
Depreciation
(Cr.)
Profit
Before
Tax
(PBT)
(Cr.)
Tax
(33.66%)
(Cr.)
Profit
After
Tax
(PAT)
(Cr.)
Cash Inflow
(Dept.+PAT)
(Cr.)
1 0 0 0 0 0 0 0
2 110.73 29.62 21.11 60.00 20.19 39.80 60.91
3 268.91 44.44 42.21 182.26 61.35 120.91 163.12
4 300.55 37.03 42.21 221.30 74.49 146.81 189.02
5 316.36 29.62 42.21 244.53 82.31 162.22 204.43
6 316.36 22.22 42.21 251.93 84.80 167.13 209.43
7 316.36 14.81 42.21 259.34 87.29 172.04 214.25
Page 89

8 316.36 7.41 42.21 266.74 89.79 176.96 219.17
9 316.36 0.00 42.21 274.15 92.28 181.87 224.08
10 316.36 0.00 42.21 274.15 92.28 181.87 224.08
11 316.36 0.00 42.21 274.15 92.28 181.87 224.08
12 316.36 0.00 42.21 274.15 92.28 181.87 224.08
13 316.36 0.00 42.21 274.15 92.28 181.87 224.08
14 316.36 0.00 42.21 274.15 92.28 181.87 224.08
15 316.36 0.00 42.21 274.15 92.28 181.87 224.08
16 316.36 0.00 42.21 274.15 92.28 181.87 224.08
17 316.36 0.00 42.21 274.15 92.28 181.87 224.08
18 316.36 0.00 42.21 274.15 92.28 181.87 224.08
19 316.36 0.00 42.21 274.15 92.28 181.87 224.08
20 316.36 0.00 42.21 274.15 92.28 181.87 224.08
21 316.36 0.00 42.21 274.15 92.28 181.87 224.08
22 158.18 0.00 42.21 115.97 39.03 76.93 119.14

Net Present Value:
Table-4
Year Depreciation
(Cr.)
Profit After
Tax (PAT)
(Cr.)
Cash Inflow
(Dept.+PAT)
(Cr.)
PVIF (10%)
(Cr.)
PV (Cr.)
1 0 0 0 0.909 0
2 21.11 39.80 60.91 0.826 50.31
3 42.21 120.91 163.12 0.751 122.50
4 42.21 146.81 189.02 0.683 129.10
5 42.21 162.22 204.43 0.620 126.75
6 42.21 167.13 209.43 0.564 118.12
7 42.21 172.04 214.25 0.513 109.91
8 42.21 176.96 219.17 0.466 102.13
9 42.21 181.87 224.08 0.424 95.01
10 42.21 181.87 224.08 0.385 86.27
Page 90

11 42.21 181.87 224.08 0.350 78.43
12 42.21 181.87 224.08 0.318 71.26
13 42.21 181.87 224.08 0.289 64.76
14 42.21 181.87 224.08 0.263 58.93
15 42.21 181.87 224.08 0.239 53.56
16 42.21 181.87 224.08 0.217 48.63
17 42.21 181.87 224.08 0.197 44.14
18 42.21 181.87 224.08 0.179 40.11
19 42.21 181.87 224.08 0.163 36.53
20 42.21 181.87 224.08 0.148 33.16
21 42.21 181.87 224.08 0.135 30.25
22 42.21 76.93 119.14 0.122 14.54
Total 1514.39

Total Capital Cost = Rs.592.80 (Cr.)
Net Present Value = Present Value of Cash Inflow Cash Outflow
= Rs. (1514.39 592.80)
= Rs.921.59 (Cr.)
Profitability I ndex:
Table-5
Year Depreciation
(Cr.)
Profit After
Tax (PAT)
(Cr.)
Cash Inflow
(Dept.+PAT)
(Cr.)
PVIF (10%)
(Cr.)
PV (Cr.)
1 0 0 0 0.909 0
2 21.11 39.80 60.91 0.826 50.31
3 42.21 120.91 163.12 0.751 122.50
4 42.21 146.81 189.02 0.683 129.10
5 42.21 162.22 204.43 0.620 126.75
6 42.21 167.13 209.43 0.564 118.12
Page 91

7 42.21 172.04 214.25 0.513 109.91
8 42.21 176.96 219.17 0.466 102.13
9 42.21 181.87 224.08 0.424 95.01
10 42.21 181.87 224.08 0.385 86.27
11 42.21 181.87 224.08 0.350 78.43
12 42.21 181.87 224.08 0.318 71.26
13 42.21 181.87 224.08 0.289 64.76
14 42.21 181.87 224.08 0.263 58.93
15 42.21 181.87 224.08 0.239 53.56
16 42.21 181.87 224.08 0.217 48.63
17 42.21 181.87 224.08 0.197 44.14
18 42.21 181.87 224.08 0.179 40.11
19 42.21 181.87 224.08 0.163 36.53
20 42.21 181.87 224.08 0.148 33.16
21 42.21 181.87 224.08 0.135 30.25
22 42.21 76.93 119.14 0.122 14.54
Total 1514.39

Present Value (PV) of Cash Inflows = Rs.1514.39 (Cr.)
Present Value (PV) of Cash Outflow = Rs.592.80 (Cr.)
Therefore,
Profitability Index = PV of Cash Inflows PV of Cash Outflow
= 1514.39 592.80
= 2.55 (times)




Page 92

I nternal Rate of Return:
Discounted rate taken as 22%.
Table-6
Year Cash Inflow
(Dept.+PAT)
(Cr.)
PVIF (22%)
(Cr.)
PV (Cr.)
1 0 0.819 0
2 60.91 0.671 40.87
3 163.12 0.550 89.71
4 189.02 0.451 85.24
5 204.43 0.370 75.63
6 209.43 0.303 63.45
7 214.25 0.248 53.13
8 219.17 0.203 44.49
9 224.08 0.167 37.42
10 224.08 0.136 30.47
11 224.08 0.112 25.09
12 224.08 0.092 20.61
13 224.08 0.075 16.80
14 224.08 0.061 13.66
15 224.08 0.050 11.20
16 224.08 0.041 9.18
17 224.08 0.034 7.61
18 224.08 0.027 6.05
19 224.08 0.022 4.92
20 224.08 0.018 4.03
21 224.08 0.015 3.36
22 119.14 0.012 1.42
Total 644.45


Page 93

Where,
RV = Relative Value
HV = Higher Value, LV = Lower Value
HR = Higher Rate, LR = Lower Rate
Discounted rate taken as 24%.
Table-7
Year Cash Inflow
(Dept.+PAT)
(Cr.)
PVIF (24%)
(Cr.)
PV (Cr.)
1 0 0.806 0
2 60.91 0.650 39.59
3 163.12 0.524 85.47
4 189.02 0.423 79.95
5 204.43 0.341 69.71
6 209.43 0.275 57.59
7 214.25 0.221 47.34
8 219.17 0.178 39.01
9 224.08 0.144 32.26
10 224.08 0.116 25.99
11 224.08 0.093 20.83
12 224.08 0.075 16.80
13 224.08 0.061 13.66
14 224.08 0.049 10.97
15 224.08 0.039 8.73
16 224.08 0.032 7.17
17 224.08 0.025 5.60
18 224.08 0.020 4.48
19 224.08 0.016 3.58
20 224.08 0.013 2.91
21 224.08 0.010 2.24
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22 119.14 0.008 0.95
Total 574.92

Discounted rate taken as 22% = 644.45 (Cr.)
Discounted rate taken as 24% = 574.92 (Cr.)
Therefore,
Internal Rate of Return = LR + {(HV - RV) (HV - LV)} * (HR - LR)
= 22 + {(644.45 592.80) (644.45 574.92)} * (24 - 22)
= 23.48%

Payback Period:
Table-8
Year Depreciation
(Cr.)
Profit After
Tax (PAT)
(Cr.)
Cash Inflow
(Dept.+PAT)
(Cr.)
Cumulative
Cash Inflow
(Cr.)
1 0 0 0 0
2 21.11 39.80 60.91 60.91
3 42.21 120.91 163.12 224.03
4 42.21 146.81 189.02 413.05
5 42.21 162.22 204.43 617.48
6 42.21 167.13 209.43 826.91
7 42.21 172.04 214.25 1041.16
8 42.21 176.96 219.17 1260.33
9 42.21 181.87 224.08 1484.41
10 42.21 181.87 224.08 1708.49
11 42.21 181.87 224.08 1932.57
12 42.21 181.87 224.08 2156.65
13 42.21 181.87 224.08 2380.73
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14 42.21 181.87 224.08 2604.81
15 42.21 181.87 224.08 2828.89
16 42.21 181.87 224.08 3052.97
17 42.21 181.87 224.08 3277.05
18 42.21 181.87 224.08 3501.13
19 42.21 181.87 224.08 3725.21
20 42.21 181.87 224.08 3949.29
21 42.21 181.87 224.08 4173.37
22 42.21 76.93 119.14 4292.51
Total 4292.51

Payback Period = 4 years 10 months.
When we are adding the Cash Inflows, we are finding that Rs.413.05 of the original outlay is
recovered in the first 4 years. And in the fifth year Cash Inflow generated is Rs. 204.43 and only
Rs.179.75 0f the original outlay remains to be recovered.
So, {(179.75 204.43) * 12} = 10 months.

Discounted Payback Period:
Table-9
Year Cash Inflow
(Dept.+PAT)
(Cr.)
PVIF (10%)
(Cr.)
PV (Cr.) Cumulative
PV (Cr.)
1 0 0.909 0 0
2 60.91 0.826 50.31 50.31
3 163.12 0.751 122.50 172.81
4 189.02 0.683 129.10 301.91
5 204.43 0.620 126.75 428.66
6 209.43 0.564 118.12 546.78
7 214.25 0.513 109.91 656.69
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8 219.17 0.466 102.13 758.82
9 224.08 0.424 95.01 853.83
10 224.08 0.385 86.27 940.10
11 224.08 0.350 78.43 1018.53
12 224.08 0.318 71.26 1089.79
13 224.08 0.289 64.76 1154.55
14 224.08 0.263 58.93 1213.48
15 224.08 0.239 53.56 1267.04
16 224.08 0.217 48.63 1315.67
17 224.08 0.197 44.14 1359.81
18 224.08 0.179 40.11 1399.92
19 224.08 0.163 36.53 1436.45
20 224.08 0.148 33.16 1469.61
21 224.08 0.135 30.25 1499.86
22 119.14 0.122 14.54 1514.40
Total 1514.40

Payback Period = 6 years 5 months
When we are adding the Cash Inflows, we are finding that Rs.546.78 of the original outlay is
recovered in the first 6 years. And in the seventh year Cash Inflow generated is Rs.109.91 and only
Rs.46.02 of the original outlay remains to be recovered.
So, {(46.02 109.91) * 12} = 5 months.

Average Rate of Return:
Table-10
Year Cash Inflow
(Dept.+PAT)
(Cr.)
Depreciation
(Cr.)
Cash Inflow
(Before Dept.)
(Cr.)
1 0 0 0
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2 60.91 21.11 39.80
3 163.12 42.21 120.91
4 189.02 42.21 146.81
5 204.43 42.21 162.22
6 209.43 42.21 167.13
7 214.25 42.21 172.04
8 219.17 42.21 176.96
9 224.08 42.21 181.87
10 224.08 42.21 181.87
11 224.08 42.21 181.87
12 224.08 42.21 181.87
13 224.08 42.21 181.87
14 224.08 42.21 181.87
15 224.08 42.21 181.87
16 224.08 42.21 181.87
17 224.08 42.21 181.87
18 224.08 42.21 181.87
19 224.08 42.21 181.87
20 224.08 42.21 181.87
21 224.08 42.21 181.87
22 119.14 42.21 76.93
Total 3427.11

Average Income = 3427.11 22 = 155.77 (Cr.)
Average Investment = 592.80 2 = 296.40 (Cr.)
Therefore,
Average Rate of Return = (Average Income Average Investment) * 100
= (155.77 296.40) * 100
= 52.55%

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Page 104

Summary
Assets become outdated and obsolete with technological change and changing demands of the
business. The upgradation and modernization decision helps to improve operating efficiency and
reduce cost.
The project titled: Capital Budgeting Decision at Bokaro Steel Plant is an attempt to understand
and analyze the capital budgeting decision at Bokaro Steel Plant (B.S.L).
This project includes all the financial aspect of capital budgeting. The capital at BSL is at a very
large scale. Besides focusing on the various activities undertaken at capital budgeting, the project
tries to shed light on the decision making involved in capital budgeting decision.
Keeping this background in view, an attempt is made to examine the capital budgeting practices in
SAIL with special references to Bokaro Steel Plant. The project contains the basic postulates of
capital budgeting procedure for the analysis of capital budgeting, techniques being used to define the
capital budgeting and its impact on the management decisions. All this had been done to get a clear
view of the techniques of capital budgeting decision in Bokaro Steel Plant.



Page 105

Conclusion
Bokaro Steel Plant is a major player in the steel sectors. It has a number of large machinery which
we know are necessary for a steel company and one of it is Blast Furnace. Bokaro Steel Plant have 5
Blast Furnace, among them Bokaro Steel Plant has a proposal to upgrade its Blast Furnace No.-2.
The proposal was evaluated on a number of criteria like NPV, IRR, ARR, Profitability Index,
Payback Period and Discounted Payback Period, and after evaluation we found that this proposal
was good for the company because if this proposal is accepted then it will increase the shareholders
wealth as it is generating cash inflows greater than the opportunity cost. The Payback Period of this
proposal is also short and in less number of years it is generating the initial cash outlay. So after
evaluating this proposal we can say that this proposal is very beneficial for SAIL and it is
recommended to take this proposal for better productivity.