Chandra Shekhar Verma at 51 may be among the youngest helmsman of as big a PSU as Steel Authority India Ltd (SAIL), which was recently accorded the Maharatna status. He takes over the reins of SAIL at a time when it is implementing a major modernisation and expansion plan in its plants and mines and is trying to adopt a multi-pronged strategy to emphasise on input security and cost-competitive- ness, expand its marketing network and enhance productivity by focussing on best work practices. Ramping up the share of value-added steel and going in for production of various grades of auto steel are his priorities.
Mr. Verma, who was the director of finance of BHEL just prior to his current assignment, does not feel threatened by the proposed entry of international steel majors. “We are looking at such entries as a great opportunity for us to raise the benchmark in performance in plant and marketing for improved products and services to our customers,” he says even as he essays tie-ups with overseas steel companies.
Excerpts from an e-mail and telephone interview with Indrani Dutta.
Contrary to earlier reports, the equity holding structure of the proposed joint venture between Steel Authority of India Ltd (SAIL) and South Korea's Posco is still under discussion and it is possible that the two steel majors may hold an equal share.
Mr. Verma said “There is no rigidity on this issue on either side, but an ideal situation would be one in which each of the companies hold an equal share with one share being termed as the ‘golden share' which is set apart.” He declined to say anything more in this matter.
Mr. Verma, who took over the reins of India's largest steel-maker in June, said that the detailed project report for the proposed joint venture plant was expected to be ready by mid-October after which the agreement would be given a shape and taken to SAIL's board by November. The proposal is to set up a 1.5-million tonne plant based on Finex technology which uses iron ore fines for steel-making and does not need prime quality coking coal.
The cost of the project is being pegged at around Rs.15,000 crore and is expected to give the Korean major the Indian manufacturing-base that it has been trying for long but a project which has got stalled on land-acquisition problems.
The SAIL Chairman said that the company's vision was to target a 60 million kg output by 2020. By this time the PSU is hoping to grab a 30 per cent market share from around 18.8 per cent now. By 2012, it will complete its Rs.60,000-crore modernisation and expansion programme which will take its capacity to 23.8 million kg. Pointing out that SAIL had lost its market-leadership as it had failed to modernise and add capacity at a time when others were doing so, Mr. Verma said “Given the GDP (gross domestic product) growth and high savings and investment rates in India, we are looking at steel market growth in the country in double-digits in the current decade.”
He said that prices have bottomed out and were now expected to firm up in the ensuing festive season.
Mr. Verma has also set on his team, the task of jacking up SAIL's market share in speciality steel, especially those for the automobile sector and the white goods industry.
“It is our endeavour to increase the production of value-added items to 55 per cent (from 37 per cent now) by the time we complete our modernisation and expansion plan. This will give us better realisation and access to newer market segments.”
To tap buoyant market
Thus, production of various grades of automobile steel to tap the bouyant market in autos alongside the production of various types of cold rolled steels and pipes used by the oil industry as well as the production of forging items, top the agenda so as to take on competition from Tatas, JSW, Essar and Bhushan Steel.
Branded products of SAIL, which now have a 15 per cent share of the total turnover, would go up to 25 per cent once the Bokaro and IISCO expansions were in place, the chairman said.
On how the company planned to take on the emerging competition from overseas steel majors posed to enter India, he said “Placed as we are and given our input security, we are very confident of tackling the competition from overseas steel majors.
“In fact, we are looking at such entries as a great opportunity for us to raise the benchmark in performance in plant and marketing for improved products and services to our esteemed customers. We are also forming strategic alliances with internationally reputed steel companies to contribute to national economic growth.”
He said that while a joint venture was planned with Posco, talks have been held with Arcelor Mittal. India, he said, would see one of the highest steel consumptions during the next decade and by 2020, steel consumption might touch 150 million tonnes, assuming a growth rate of 9 per cent or more between 2010 and 2020.
He felt that SAIL could leverage its vast marketing network and its planned expansion of value-added items in its product basket to cement its position as market leader.