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Issues in family buisness : Raw Materials


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Raw Materials faced by a 100 TPD Sponge Iron Plant.

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Issues in family buisness : Raw Materials

  1. 1. Airan Steel & Power (P) Ltd. Manufacturing Process & Raw Material Procurement.
  2. 2. Introduction <ul><li>A 100 TPD Sponge Iron Manufacturing Unit in Bilaspur (C.G.) </li></ul><ul><li>Sponge Iron : Used as Substitute for Scrap Iron in steel making process. </li></ul>
  3. 3. Process
  4. 4. Raw Materials <ul><li>Iron Ore : 48000 MT per year. </li></ul><ul><li>Coal : 34500 MT per year. </li></ul><ul><li>Lime Stone : 1050 MT per year. </li></ul>
  5. 5. Iron Ore <ul><li>Unlike in the conventional steel melting processes, the gangue content of iron ore cannot be separated as a slag. Therefore, it becomes imperative to select an ore with a high Fe content and a low gangue content, to optimize yield during steel making. </li></ul><ul><li>Mixture of fines & lumps used. </li></ul><ul><li>Nearest mines : Badbil (Orissa). </li></ul>
  6. 6. Iron Ore Problems <ul><li>65+ Fe content. </li></ul><ul><li>Two prominent Sellers in Badbil. </li></ul><ul><li>Rungta Mining. </li></ul><ul><li>Essel Mining (Aditya Birla Group). </li></ul><ul><li>Only one ( Rungta Mining) sells to the company concerned. </li></ul><ul><li>Rate : Rs 2900- 3900 per MT </li></ul>
  7. 7. Iron Ore Problems <ul><li>Advance Payment of 1 rack always deposited. </li></ul><ul><li>1 month prior notice to the seller of the need (includes about 15+ calls). </li></ul><ul><li>A manager has to oversee the loading process at Badbil. </li></ul><ul><li>Rack unloading problem in Bilaspur. </li></ul>
  8. 8. Iron Ore Problems <ul><li>Product : Quality Issues. </li></ul><ul><li>Due to long operational cycle, rate fluctuations cannot be covered. </li></ul>
  9. 9. Solutions <ul><li>Sponge Iron Manufacturer Association to bid for Iron Ore Mines. </li></ul><ul><li>NMDC (Govt. Mines). </li></ul><ul><li>2-3 Manufacturer share a rack. </li></ul><ul><li>New Technology : China imports fines, and coverts them to lumps. </li></ul><ul><li>Cost of this project : 30 cr. for 300 MT plant. ( in the end, cost of iron ore will Rs 2000 per MT) </li></ul>
  10. 10. Coal <ul><li>Non-Coking Coal of Higher Grade. </li></ul><ul><li>Mines : SECL, headquartered at Bilaspur. </li></ul><ul><li>Purchase : Brokers from the open market, ONLINE Auction by MSTC, Calcutta. </li></ul><ul><li> : online service. </li></ul>
  11. 11. Coal Problems <ul><li>Quality. </li></ul><ul><li>Online Auctions : Advance Payment. </li></ul><ul><li>Online Auctions : Random. </li></ul><ul><li>To maintain relations, one has to buy regularly from Open Market also. </li></ul>
  12. 12. Solutions <ul><li>Availability : Linkage. </li></ul><ul><li>Quality : Petroleum Coke. </li></ul>
  13. 13. Other Issues <ul><li>Loading & Unloading of Iron Ore Rack. </li></ul><ul><li>Sponge Iron Transporting. </li></ul><ul><li>NMDC Mines. </li></ul><ul><li>Coal Linkage. </li></ul>
  14. 14. Final Solution <ul><li>SCALE UP, to be able to dictate terms. </li></ul><ul><li>Now, its just a VOLUME game. </li></ul>