Make In India – Steel Industry

As we all aware that Indian government has started new initiative “Make in India”. To be successful the products Made in India should have cost competitive advantage over imported products.
The raw material costs used for making the finished goods all over the world are almost same. In case of iron & steel industry the cost of iron ore, scrap and major alloying elements are same all over the world. What is different in India is:

1. Energy (Electricity) costs
2. Labour Costs
3. Taxes

All the above costs are out of the control of individual steel manufacturer. So how can we reduce our product prices which can make our products economically viable and become a major substitute for imported products?

What the iron and steel producers can control is steel making process, the energy utilized in generating per ton of steel, the optimization of valuable raw materials (such a nickel, chromium, etc.) used per ton of products produced.

As such the steel making process may be same all over the world, the issue is – can we optimize that process in such a way that our product costs are reduced significantly? One such optimization process is say planning for multiple heats in one go instead of planning for single heat. With multiple heat planning in one go, we can schedule different heats according to the raw material available and the output chemistry required. This reduces the cost of product as we have optimized the raw material and energy over multiple heats.

Also we can optimize on the costly raw materials (such as Nickel, Copper, Chromium, etc.) by understanding their recovery rates, hot heel size of the furnaces and the raw material used. With this, we can reduce a lot on the costly raw materials and save the raw material costs.

Since we have optimized the output chemistry as required without much trial and error, the furnace utilization increases giving us more output for same period further reducing the costs of our products.

When we apply multiple techniques to reduce our product costs, our products become economically competitive and of the perfect chemistry (as required by the customers), then our sales would increase multi-fold. The underline is – we have to remember that every rupee saved leads to more rupees gained (due to higher sales). Time for us to adopt better technologies and better processes.