Four domestic steel majors _ Essar Steel, Ispat, Lloyds Steel and Jindals have joined hands to form a `steel club', christened the Confederation of Indian Steel Manufacturers. This is seen as a strategic move on the part of the steel majors to have an exclusive body to take up various issues of the industry with the government.
According to sources, Essar Steel will head the association in the first year. Thereafter, the chairmanship will be held on a rotation basis.
The move to float an exclusive steel club follows the growing clash of interests between the steel companies and the Confederation of Indian Industry (CII), of which most of them are members.
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According to one of the members of the `club', there were several instances when there were verticial divisions within the apex chamber_particularly over the issue of import duties on steel_ with the steel manufacturers on one side and the capital goods and automobile industries on the other. The latter are the major importers of steel and are fighting for lower import duties which is hitting the domestic steel industry adversely.
The sources said that on several occasions, recommendations made by the steel committee of CII were either diluted or drastically changed by the higher ups in the chamber.
CII president Rajesh V Shah, however, refused to comment on the issue.
Significantly, two major players in the steel sector_Steel Authority of India Limited (SAIL) and Tata Iron and Steel Company (Tisco) are not planning to join the proposed steel association.
A SAIL spokesman told Business Standard that the company had no information about the new body nor did it plan to join any such organisation.
The `steel club' is understood to have already started interactions with the government on some common issues. The association members have also represented to the finance ministry on imposing anti-dumping duty on some of the HR coil and CR coil products.
The four steel majors are also understood have made a demand to the steel ministry on stopping the practice of giving loans to any steel companies from the Steel Development Fund (SDF). Instead, they wanted the fund to be used entirely for research and development activities in the steel sector as has been recommended by the finance ministry.
Though the steel ministry has set up an empowered committee following the directive from the finance ministry on the use of SDF, so far it has finalised only 2-3 minor R&D projects for financing. The new body is also planning to make a demand for putting higher import duties on secondary steel products. According to industry sources, the members of the exclusive steel club may use their forum for a tacit understanding on regulating their production plans in order to gain advantage on the price front.
Since all the four members of the club have the advantage of having steel plants based on state-of-the-art technologies, they manufacture a wide range of products particularly in HR and CR coils, which the other two steel majors Sail and Tisco do not have. It is in these product segments, the four-some can have some joint strategies in regard to production and pricing.