SEIL : Playing the crucial role in economy growth

Mr. Satish Kumar, Managing Director
Steel Exchange India Limited (SEIL)

India has traditionally been one of the major producers of steel in the world. After the economic reforms of the early 1990s, the steel industry in India evolved significantly to conform to global standards. Today, steel industry is one of the leading industries that is growing rapidly in this competitive world. The steel industry in India is expected to play a major role in the country’s economic development in the coming years.

Steel Exchange India Limited (SEIL), a part of Vizag Profiles Group, is one of the major manufacturers of steel in the private sector in Andhra Pradesh. It was incorporated in February 1999 as Pyxis Technology Solutions Limited (PTSL), a software company focused on the development of business-to-business specific online solutions. Having enough experience in the steel trading, the promoters decided to launch a portal based steel trading platform. Later, when the requirement for steel started mounting, the promoters progressively ventured into steel manufacturing as a backward integration of their strong steel retail & trading business by acquiring Simhadri Steels, a company having a rolling mill at Vizag and setting up an ingot manufacturing unit at Kothapeta in 2004.

Under a Scheme of Amalgamation approved by the Members of the Companies, M/s Steel Exchange India Limited (Subsidiary) and M/s Simhadri Steels Private Limited (a company acquired by the group) were merged with M/s Pyxis Technologies Solutions Limited and the name of the Company was changed to M/s Steel Exchange India Limited. The equity shares of the company are listed on the Bombay and Kolkata stock Exchanges. SEIL primarily deals in manufacture and sale and purchase of steel products, which are utilized for construction purpose.

COAL HANDLING PLANT

Activities:

• SEIL Trading Division- trades in all types of structural steel, long products, special steels ,Semis and Raw materials for steel sector.
• SEIL Ingot Manufacturing and Power Division- manufactures 90000 TPA steel Ingots and has got 12 MW Captive power generation from Gas.
• SIMHADRI – STMT Re-bar Rerolling of FE-500 Grade having capacity of 45000 TPA.

Integrated steel Plant (ISP) – Kothavalsa – Consisting of

• Sponge Iron unit – 220,000 TPA capacity sponge iron unit
• Billet Division – 240,000 TPA capacity SMS Billet unit
• Rolling Div- STMT Rolling of Fe-500 Grade having capacity of 225,000 TPA in state of the art imported rolling mill.
• Wire Drawing division- MS Binding and Gauge wire, High Carbon PC wire and stranded PC wire manufacturing unit of 24,000 TPA
• The Company has plans for further backward integration by setting up a 0.6 million iron ore Pellet plant and increase the manufacturing base to 1 million tons of finished steel by 2020.

SEIL currently comprises of the following divisions:
ISP Division
With the merger of GSAL (India) limited a sick company referred to the BIFR the company has a 220,000 TPA sponge iron unit located close to Vishakapatnam.

The unit is located at village Malliveedu, L. Kota Mandal, Vizianagaram District, Andhra Pradesh. The factory is well connected by road and the site is approximately at 40 kilometers distance from Visakhapatnam City. The present factory has 2 nos. of DRI rotary kilns, each of 350 Tons/ day capacity and operating with CODIR technology of Mannesmann Demag Hutten Technik, Germany.

The plant has a captive railway siding with 3 tracks for receipt of Iron ore and Coal rakes. The unit has extensive material handling system for Iron ore and Coal. It has a well set up laboratory. The plant is in excellent working condition. Over 400 acres of land is available for further expansion and down ward integration.

SEIL was introduced as the strategic investor cum new promoter in the rehabilitation of GSAL. SEIL set up the 225,000 TPA rolling mill and 240,000 TPA Billet plant as part of the rehabilitation scheme of the sick company in the same premises to set up the integrated steel plant.

The new Billet unit of 240,000 TPA capacity with continuous casting was completed in August 2010. The unit has been set up at Kothavalsa, Maliveedu Village and will captively consume the sponge iron produced from the sponge iron unit.

The new state of the art rolling mill to produce TMT bars has been set up at Maliveedu, L.Kota Mandal, Vizianagaram District, Andhra Pradesh with a capacity of 225,000 TPA. The unit was completed in March 2010. The sparingly used Rolling mill was imported from Taiwan. The mill is a highly automated mill and complete automation of the plant is by ABB. The drives have been supplied by ABB and the PLC system by Siemens. This is a state of the art rolling mill with straight line pass and multiple stands and can also produce wire rod coils by addition of a wire rod block and a Stellmore cooling bed which will be taken up subsequently to have value added products. With the Billet unit and the new rolling mill of 225,000 TPA capacity, SEIL has successfully set up an integrated steel manufacturing hub at Kothavalsa to produce finished steel from the iron ore stage.

The DRS submitted to the BIFR has been approved vide their order dated 6.8.2012. The scheme inter-allia approved the merger of GSAL (India) limited with SEIL at a swap ratio of one share of SEIL for every ten shares of GSAL.

Steel Melting – Billets & Ingot Divisions
As part of consolidation and backward integration, this division was set up with financial assistance from SBI to manufacture Steel Ingots using captive generated power in two phases. Phase I was setting up of 60,000 TPA ingot unit with 6 MW captive natural gas based power generation. In Phase II the installed capacity was increased to 90,000 tons in June’2006. The Gas based Power Generation capacity was also increased from 6 MW to 8 MW and later to 10 MW in 2008-09.

Recently, over the past couple of months month, ONGC, a major oil firm, started supplying gas under direct marketing plan from its remote fields in the K-G Basin to Steel Exchange India Limited at the rate of 35,000 standard cubic meters per day (scmd).

Steel Rolling Mill
The company has a Rolling mill located near Visakhapatnam with an installed capacity of 45,000 tons per annum. The unit manufactures TMT Re-Bars, which are marketed under the Simhadri TMT brand name, which is a reputed and well recognized brand in the market.

Wire Drawing Division
The company has a wire drawing unit located at Vishakapatnam. This unit is a sick unit acquired from Signet Steel Private Limited and revived with an installed capacity of 24,000 tons per annum can produce 14,000 tons High Carbon wire products and 10,000 tons of galvanized wire product.

Trading Division
The trading division deals in sale and purchase of steel products. The trading division offers the Company unparallel marketing strength in the Steel Industry, which in turn is essential for higher turnover for inventories & also acts as insulation against price volatility. The trading division of the Company has attained fame as Visakhapatnam Steel Plant’s largest dealer for many years. It has a strong retail chain with retail outlets at Visakhapatnam, Vijaywada, Hyderabad, Nellore, Rajahmundry, Tirupati, Bangalore, Chennai and Cochin.

60 MW Power Plant
SEIL set up a 60 MW captive power plant through its SPV Simhadri Power Limited in GSAL premises. The unit has come into operation in December’2012. The unit generates about 14 MW from waste heat recovery of DRI Kilns and about 24 MW of power will be generated from the coal fines and char also generated by the DRI unit. The balance power will be generated by fresh coal. The project has been set up by Simhadri Power Limited an SPV promoted by SEIL. SEIL will consume up to 51% of the power generated. The total project cost is about Rs.320 crores.

SPL has successfully commissioned the CFBC boiler and turbines with power generating capacity of 50 MW on 17.11.12. The balance 2 X 5 MW from Waste heat recovery boilers were commissioned in Jan 2013 and March 2013.

Over one and a half decade back, with the core strengths of steel trading, transport and manufacturing a budding group of enterprising enthusiastic professionals came together to incorporate the Vizag Profiles Group. It rose to eminence by emerging as the leading steel distributor for the steel manufacturing public sector giants Visakhapatnam Steel Plant and Steel Authority of India Ltd.

Steel Exchange India Ltd a VPL group company was at the stage of inception in 1999 was a steel retail and trade service organization and in a span of few years has expanded into a large integrated steel plant in the private sector, in Andhra Pradesh. The group has a history of acquiring sick companies and turning them around into successful ventures.

The steel industry, like any other industry, suffered a setback due to the sluggish economy in the country and across the globe. However, this situation is about to change. Demand for domestic steel is expected to increase by 3-5 %. However, weak demand coupled with an acute shortage and high prices of iron ore are expected to keep margins under pressure.

India has advantage in terms of having almost all the technologies of steel making such as induction furnaces, direct reduced iron (DRl) – induction melting furnaces(large capacity), continuous casting of billets or rolling mills. Prices of steel products are estimated far above the ground in India than in China. MS billets in the Hyderabad spot market were quoted at $611 a tonne and Rourkela (the first integrated steel plant in the public sector in India which was set up with German collaboration) at $530 a tonne, compared with $517 a tonne in the Tangshan market of China. Similarly, rebar in Hyderabad was sold at $656 a tonne and versus $570 a tonne in the Tianjin spot market in China. Steel prices are rising due to a rebound in regional demand from the construction sector.

While the budget focused on rural and infrastructure development which may increase the steel consumption, there was no cut in the 30 percent excise duty on exports of both iron ore lumps and fines. But it cannot be said that prices are firm because of budget or demand. It is only because freight rates hiked up which resulted into a slight increase in prices as traders are passing on the impact of freight hike on consumers.

The various schemes proposed in budget 2013 for the infrastructure sector will surely benefit the roads and housing segments. Today, India is ranked the fourth largest steel producing country in the world and has recorded the highest growth rate amongst the top ten steel producing countries of the world. The steel industry in India is expected to become the second largest steel producer soon.