2. One of the most useful and versatile material, steel is
considered to be the backbone of human civilization.
Consumption of steel is taken to be an indicator of
The establishment of Tata Iron and Steel Company
(TISCO) in 1907 was the starting point of modern Indian
3. At the end of 2012, the steel production capacity in India is
expected to touch 124 million tonnes and 275 million tonnes by
With development in civilization, various new application of
stainless steel have been developed such as:
1. Architecture, building and construction, use in railway coaches.
3. Chemical, processing and oil & gas industries
4. Power generation
5. Manufacture of LPG cylinders,
6. In portable water treatment plant
7. Food production
8. Medical applications
4. During the early 90s, the sponge iron industry had been specially
promoted so as to provide an alternative to steel melting scrap,
which was increasingly becoming scarce.
As per the International Iron and Steel Institute, India has emerged
as the largest producer of sponge iron in the world in 2001 and
2003 accounting for about 14.54% and 14.82% respectively
5. SAL Steel is a versatile steel, Ferro Alloys and Power
Company having operations near Kandla Port in the state
of Gujarat in Western India.
SAL also selling power to various customers from its 40
MW power plant.
The company has double advantage of having
proximity one of the busiest commercial port and also
to the customer of company’s finished products.
9. To be recognized as the leader in
India, in high quality Sponge iron,
Ferro alloys, increasingly in the
10. To provide a high level of
customer satisfaction through
products, technical support
and fair commercial practices
keeping safety of the
employee and environment at
the top priority.
11. To be leader in our product portfolio with latest
technology, technical and managerial excellence.
To be conscious of our responsibility towards society
To improve continuously our operational norms
To provide a fair return to our shareholders.
To provide on-going training and development of all
Building a corporate culture of learning, trust and
• Good quality standards.
• Sponge iron of our company consist of 84% pure iron
• Cost competitiveness.
• Diverse Supplier Base.
• Long-standing contracts for purchase of raw materials.
• Strong product design and development.
• Skilled, qualified and motivated employees
• Captive Power Consumption.
15. • Exposure to raw material price fluctuations.
• Under-utilization of plant capacity.
• Dependency on third party for raw material.
16. • Unexplored Markets- The Indian rural sector remains fairly
unexposed to their multi-faceted use of steel. The rural market was
identified as a potential area of significant steel consumption way
back in the year 1976 itself.
• Ever-growing demand in Steel Industry- The biggest opportunity
before Indian steel sector is that there is enormous scope for
increasing consumption of steel in almost all sectors in India.
17. • Rising raw material prices.
• High Cost of Capital.
• Constraint of Raw Material availability.
• Global economic slowdown
• Competitive price of China.
18. Government are our largest suppliers.
Around 90% of our raw material are supplied by
government from different states like Orissa , Madhya
19. • S.A.L Steel Ltd produces power by itself which is an
advantage for its.
If SAL Steel Ltd had to purchase power as raw material
from suppliers it would had cost it to around Rs.15 per unit.
But this not the case with SAL Steel Ltd, power in its
plant comes at a cost of Rs.3.20
• Sponge iron of our company consist of 84% pure iron
21. Reasons for this strategy:-
In order to expand customer group.
In order to increase the scope and spread the risks.
In order to its production and efficiency.
27. Threats of new entrants
Intensity of rivalry among existing competitors
The bargaining power of suppliers
The threat of substitute products
The bargaining power of buyers
28. Capital Requirement:
Steel industry is a capital intensive business. It is
estimated that to set up 1 mtpa capacity of integrated
steel plant, it requires between Rs 25 bn to Rs 30 bn
depending upon the location of the plant and
29. The steel industry is truly global in terms of
competition with large producing countries like China
significantly influencing global prices through
Steel, being a commodity it is, branding is not
common and there is little differentiation between
The 4 major domestic rivals are SAIL, JSW, ISPAT &
ESSAR STEEL. Rest are all smallish mills which together
accounts for 30 % of the total market share.
30. Non-integrated or semi integrated industry have to depend on
suppliers. An example could be SAL, which imports lignite.
Since domestic raw material sources are insufficient to supply
the Indian steel industry, a considerable amount of raw
materials has to be imported. For example, iron ore deposits
are finite and there are problems in mining sufficient amounts
of it. India’s hard coal deposits are of low quality.
In order to safeguard itself from the high bargaining power of
the supplier, SAL had planned much earlier into the strategy of
‘Backward Integration’ by setting S.A.L Steel Ltd.
31. Plastics and composites pose a threat to Indian steel in one
of its biggest markets — automotive manufacture.
For the automobile industry, the other material at present
with the potential to upstage steel is aluminium.
Perhaps the most attractive alternative to stainless is
32. Some of the major steel consumption sectors like
automobiles, oil & gas, shipping, consumer durables
and power generation enjoy high bargaining power
and get favourable deals.
However, small and retail consumers who are
scattered and consume a significant part do not enjoy
35. Raw material i.e. iron ore, Ferro chrome ore, etc. from mines in
Karnataka, Madhya Pradesh, Orissa and Goa for their plant at
Bharapar which involves logistical issues, economic decision
making in ensuring optimum inventory.
Any delay in supply of raw material to their plant may affect their
plant’s operations, which in turn may hamper the Company in
fulfilling its obligation for supply of sponge iron
36. Further, any rise in the transportation cost may in turn lead to
rise in the cost of production.
In case they are not able to pass on the burden of such
additional cost to the buyer of our product, our profit margins
may be affected.
Maintain minimum inventory for 1.75 months for iron ore and
Ferro chrome ore, which the company feels quite adequate in
meeting the working capacity of plant in case of logistical delays
arising in ordinary course of business or unfortunate
circumstances arising in business
37. Major inputs like limestone in production of
sponge iron and Lignite for our Captive
Power Plant are in abundance in the
surrounding areas and are easily available.
Installation of Captive Power Plant reduces the
power cost considerably and keeps the
production costs, particularly of Ferro-alloys low.
38. The Project is set up at Village Bharapar, Kutch,
which is near the Kandla Port and will result in
benefits available at the location under the special
package of incentives for sales tax and excise duty
declared under the Incentive Scheme 2001 for
Economic Development of Kutch District after the
earthquake. This as result in cost savings.
39. The Board of Directors & Senior Management Members shall:
• Act honestly, fairly, ethically and with integrity;
• Act in the best interest of and fulfill their fiduciary obligations to S.A.L Steel
Limited and all its stakeholders;
• Act in good faith, responsibly, with due care, competence and diligence,
without allowing their independent judgment to be subordinated;
• Disclose potential conflicts of interest that they may have regarding any
matters relating to S.A.L Steel Limited;
• Comply with all applicable laws, rules and regulations;
40. • Comply with all applicable laws, rules and regulations;
• Maintain the confidentiality of information relating to
the affairs of the Company acquired in the course of
their service as Directors, except when authorized or
legally required to disclose such information;
• Disclose potential conflicts of interest that they may
have regarding any matters that may come before the
Board, and abstain from discussion and voting on any
matter in which the Director has or may have a conflict
41. Shah alloys ltd
SAL steel ltd
Sponge iron Ferro alloy
Production Production Production
Finance Finance Finance
Engineering Engineering Engineering
42. PRODUCT BASE STRUCTURE
SAL steel is having product base structure as grouping
of the activities is done on the basis of the product
line. The advantages of this structure that the
company get are,
• Optimum use of the specialized skills and
• Increases coordination and enables fixation of
responsibilities for profit making and usage of
43. INTERNAL CONTROL SYSTEM
The Company has adequate internal control
procedures with accordance to its size and
nature of its business. The objectives of these
procedures are to ensure efficient use and
protection of the Company’s resources,
accuracy in financial statements and due
compliance of statutes and Company’s
policies and procedures.
44. Company maintained healthy, cordial and
harmonious industrial relations at all levels. The
Board of Directors and management wish to place
on record their appreciation of the efforts put in
by all employees to achieve good performance.
45. COMPANY’S PHILOSOPHY ON CODE OF
• Corporate Governance is a set of systems and practices to
ensure that the affairs of the Company are being managed
in a way which ensures accountability, transparency,
fairness in all its transactions in the widest sense and meet
its stakeholders aspirations and expectations.
• The Company will continue to focus its resources, strengths
and strategies for enhancement of the long term
shareholders’ value while at the same time protecting the
interest of other stakeholders.
46. SHAREHOLDERS’/INVESTORS’ GRIEVANCE COMMITTEE
• Shri Ambalal C Patel– Chairman, Shri Jethabhai M Shah
and Shri Harshad M Shah are members of the Committee.
• The Committee is empowered to oversee the redresses of
Investors’ complaints and other miscellaneous
• The Company as a matter of policy disposes of investor
complaints within a span of five working days.
• During the year under review, all shareholders complaint
received either by Registrar & Share Transfer Agent or the
Company were satisfactorily replied and resolved. There
were no outstanding complaints as on 31st March, 2012.
47. INFORMATION SYSTEM
SAL steel uses fully computerized
information system. They also use
transaction processing system and
Enterprise Resource Planning software
49. S.A.L. Steel Limited are committed to satisfy customer
by providing quality products and services.
To install and maintain suitable Quality Management
To achieve continual improvement in technology,
products and services.
To encourage employee participation at all levels
supplemented with continuous training and
50. Prevention of industrial risk rather than
detection/ rectification and its adverse impact
on the environment.
Preserve the health, safety and environment of
plant and its neighborhood.
Follow safe work practices and continually
improve the effectiveness of system.
51. Creating an environment of teamwork as well
as increase the system awareness to
Conserve natural resources by their
responsible and efficient use in all operations.
Comply with relevant laws and regulations as
well as take any additional measures