Steel bodies to come together

1,000 steel companies to form new association.

In what could be the biggest merger of all times among industry associations, six bodies representing about 1,000 downstream steel companies are planning to join hands to lobby jointly with the government and hot-rolled coil (HRC) producers.

A final announcement on the new Confederation of Indian Steel Producers was likely to be made next month by the six associations, a senior official of one of the associations told Business Standard.

The associations are Cold Rolled Steel Manufacturers' Association of India, All India Re-rollers Association, All India Induction Furnace Association, Steel Rolling Mills Association of India, Sponge Iron Manufacturers' Association and Ship Breakers' Association of India.

With the formation of the new alliance, the six associations will be able to lobby jointly against the rising HRC prices, which has affected their operations.

According to the official, the secondary steel producers were ignored by the government despite accounting for over 50 per cent of the total finished steel production in the country.

"There is discriminatory treatment towards the secondary sector. We are totally ignored in policy making. We are not allowed to become members of the joint plant committee," he said.

As per available data, the production of finished steel grew by 7.5 per cent to 36.18 million tonnes during 2003-04. Of this, 21 million tonnes came from the secondary producers while the main producers accounted for 15.18 million tonnes.

The official said the reduction in the customs duty on steel from 25 per cent to 15 per cent and that of excise duty by half to 8 per cent did not lead to any drop in prices by the five major HRC producers, Steel Authority of India, Tata Iron and Steel Company, Jindal Vijaynagar Steel Ltd, Essar Steel and Ispat Industries.

Besides, the freeze on duty entitlement passbook scheme also did not help to improve domestic availability of steel, he said.

"After the confederation is formed, we will be formulating a plan. The rates of interest for the major producers is lower but for us, it is high. If the total steel production in India has to reach 100 million tonnes by 2020 as per the proposed National Steel Policy, then we will have to take steps to increase our production from 21 million tonnes to at least 50 million tonnes ," the official said.

He said globally secondary steel producers were more cost-effective as they required lower investments, have more flexibility in production, low break-even point and produce specialty products.