THE YEAR IN BRIEF
ESL is an integrated steel plant (ISP) in Bokaro, Jharkhand, with a design capacity of 2.5 mtpa. Its current operating capacity is 1.5 mtpa with a diversified product mix of wire rod, rebar, DI pipe and pig iron.
In FY2021, ESL Steel Limited (ESL) has achieved lowest ever cost during the year since acquisition resulting in higher EBITDA margin vis-à-vis previous period (US$ 95 per tonne v/s US$ 78 per tonne).
THE YEAR IN BRIEF
ESL is an integrated steel plant (ISP) in Bokaro, Jharkhand, with a design capacity of 2.5 mtpa. Its current operating capacity is 1.5 mtpa with a diversified product mix of wire rod, rebar, DI pipe and pig iron.
In FY2021, ESL Steel Limited (ESL) has achieved lowest ever cost during the year since acquisition resulting in higher EBITDA margin vis-à-vis previous period (US$ 95 per tonne v/s US$ 78 per tonne).
OCCUPATIONAL HEALTH & SAFETY
We had one unfortunate incident on the road inside the plant on 29 July 2020, wherein the driver while standing on the road in front of the truck was struck by a payloader. The vehicle was coming from the opposite direction and resulted in fatality. Actions were undertaken as per the detailed investigation to avoid such incidents in future. Currently, our LTIFR is 0.38.
Capability development of our employees and business partners continue to be our priority. We have engaged various external agencies in providing specialised trainings such as rescue training, training for signalman and riggers, defensive driving training, Vedanta Safety Standard requirements, MBRD sessions, and so on.
As a part of our 24x7 safety culture, we have commenced monthly shutdowns, continuous engagement with all team members, in which the senior leadership visits the shopfloors and communicates with workers on lessons learnt from recent incidents. Our safety alerts are also available in local languages and displayed at all strategic locations.
External studies have been conducted on ergonomics, hygiene study (qualitative) illumination, noise and arc flash assessment. We have also strengthened our firefighting capability both in terms of manpower and infrastructure. On people engagement we have organised the National Safety Month celebrations and Road Safety Month celebrations with various competitions for employees and business partners.
Of VAP sales in FY2021 maintained by ESL Steel
We have also organised our first-ever Safety Summit to discuss ways and means to enhance our safety performance as a business unit.
We have won two external recognition CII HSE Excellence Award (Certificate of Appreciation) and Greentech Safety Award.
We have also implemented the COVID protocol/SOP formulated to ensure business continuity by ensuring minimum footfall and mitigating COVID-19 risk. This includes staggered shift schedules, zero touch auto sanitising facilities, daily sanitisation of workplace, vaccination for frontline warriors, SOP and handbook on COVID-19, PPE, compliances through automation, Cardinal COVID rules, etc.
ENVIRONMENT
In Waste Management system, 100% utilisation of blast furnace granulated slag, sale of fly ash to cement industries through long-term contracts and brick manufacturers, disposal of LD slag, disposal of biomedical waste to through Common Bio-medical Waste Treatment Facility (CBWTF), sale of used oil and zinc dust to recyclers authorised by the Pollution Control Board and re-processors are being ensured. E-waste and battery waste are also sent to authorised recyclers and re-processors and our membership with Treatment, Storage and Disposal Facility (TSDF) is helping the disposal of hazardous waste.
In Water Management, treatment of 4,500 kl of effluent daily in the Effluent Treatment Plant is done and it is being reutilised in several processes such as coke quenching, BF slag granulation, in greenbelt development, fire fighting, dust suppression and in operations of lime and Dolo, DIP and others. Recycling percentage has increased from 12% to 26 %.
In Energy Management, the usage of waste heat from coke oven flue gas for generation of steam, which ultimately helps in power generation, reduction in auxiliary power consumption from 12 % to 8% through improvement in station heat rate are carried out.
We are using LP steam in blast furnace to minimise the fuel requirement, LD gas and BF gas in several operations such as reheating furnace of rolling mills, blast furnace, DIP and lime and Dolo to reduce the fuel consumption, and running TG through steam generated from waste heat recovery.
In Air Emission Management, we are revamping Oxygen Convertor Gas Recovery (OG) system in Steel Melting Shop (SMS) to reduce fugitive emission, upgrading equipment to meet the norms stipulated by the regulatory authorities, revamping ESP of Sinter Plant, installing fixed sprinklers all along the roads and dry fog system in all the closed conveyors and deploying mechanical sweepers for road sweeping.
PRODUCTION PERFORMANCE
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Production (kt) | 1,187 | 1,231 | (4) |
| Pig iron | 189 | 167 | 13 |
| Billet | 165 | 27 | - |
| TMT bar | 338 | 468 | (28) |
| Wire rod | 361 | 413 | (13) |
| Ductile iron pipes | 135 | 155 | (13) |
OPERATIONS
There have been significant gains in operational efficiencies, such as optimisation of the coal mix in coke ovens and iron ore blending. Improved yields of the converters and finishing mills also added to the efficiency.
During FY2021, we produced 11,87,310 tonnes of saleable product, down 4% y-o-y on account of reduced availability of hot metal due to lower production amidst the disruption caused by the pandemic.
The priority remains to enhance production of value-added products (VAPs), i.e., TMT Bar, Wire Rod and DI Pipe. ESL maintained 72% of VAP sales, in line with priority.
Our Consent to Operate (CTO) for the steel plant at Bokaro, which was valid until December 2017, was not renewed by the Jharkhand State Pollution Control Board (JSPCB). This was followed by the Ministry of Environment, Forests and Climate Change (MoEF&CC) revoking the Environmental Clearance (EC) dated 21 February 2018. MoEF&CC, on
25 August 2020, has granted a Terms of Reference to ESL for 3 mtpa plant with conditions like fresh EIA/EMP reports and public hearing. The Honorable High Court of Jharkhand had extended the interim protection granted in the pending writ petitions till 16 September 2020. Hon’ble High Court on that date pronounced and revoked the interim stay for plant continuity w.e.f 23 September 2020. ESL filed a SLP before Hon’ble Supreme Court against the 16 September 2020 order for grant of interim status quo order and plant continuity. Vide order dated
22 September 2020, Hon’ble Supreme Court issued notice and allowed plant operations to continue till further orders. Public hearing has been concluded on 16 December 2020, and ESL has applied for grant of Environment Clearance to
MoEF & CC on 11 January 2021 on Parivesh Portal of MoEF & CC and presented before EAC on 11 Febuary 2021.
The revised proposal has been submitted on 14 March 2021 post inputs from 11 Febuary 2021 meeting.
PRICES
(US$ per tonne)
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Pig Iron | 382 | 354 | 8 |
| Billet | 336 | 418 | (20) |
| TMT | 539 | 494 | 9 |
| Wire rod | 537 | 519 | 3 |
| DI pipe | 544 | 602 | (10) |
| Average steel price (US$ per tonne) | 488 | 495 | (1) |
Average sales realisation decreased 1% y-o-y from US$495 per tonne in FY2020 to US$488 per tonne in FY2021. Prices of iron and steel are influenced by several macro-economic factors. These include global economic slowdown, US-China trade war, supply chain destocking, government expenditure on infrastructure, the emphasis on developmental projects, demand-supply dynamics, the Purchasing Managers’ Index (PMI) in India and production and inventory levels across the globe, especially in China. Even though the NSR dipped by US$7 per tonne, we were able to increase our EBITDA margin to US$95 per tonne for the year (against US$78 per tonne in FY2020) through better control over costs.
UNIT COSTS
(US$ per tonne)
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Steel (US$ per tonne) | 393 | 418 | (6) |
Cost has decreased by 6 % y-o-y from US$ 418 per tonne to US$ 393 per tonne in FY2021, primarily on account of softening of coking coal price during the year and operational efficiencies which was managed through improvement in key operational metrics.
FINANCIAL PERFORMANCE
(` crore, unless stated)
| Particulars | FY2021 | FY2020 | % change |
|---|---|---|---|
| Revenue | 4668 | 4,283 | 9 |
| EBITDA | 871 | 588 | 48 |
| EBITDA margin | 19% | 14% | - |
Revenue increased by 9% to `4,668 crore (FY2020: `4,283 crore), primarily due to higher volume. EBITDA increased by 48% to `871 crore in line with higher sales and improved cost of production.
STRATEGIC PRIORITIES & OUTLOOK
Steel demand is expected to surge owing to the gradual recovery in economic activities across the world, and the emphasis of governments to ramp up infrastructure spend. The focus is to operate with the highest Environment, Health and Safety standards, while improving efficiencies and unit costs.
The focus areas comprise:
