NEO Mega Steel based in Pune, is known for its best gamut of Iron and Steel structural and infrastructural products. MT spoke with Vedant Goel, Managing Director, Neo MegaSteel LLP, a serial entrepreneur who started his entrepreneurial voyage at the age of 16. Since 2019, he has been heading one of the renowned Iron and Steel infrastructure product supplier companies, Neo Mega Steel LLP. Vedant holds expertise in various segments like Operations Management, Retail Management, Market Research and Entrepreneurial Solutions.
What are the growth prospects of the Indian steel industry?
The growth prospects of the Indian steel industry are quite good because today, India is seeing overall growth. What is interesting is that India is also exporting specialized steel instead of raw ore, and its imports are declining. Our sound GDP growth of 8.9% in 2021-2022 is due mainly to growth in primary industries, including iron and steel. At 66.94 million tons, iron has seen 25% growth, while finished steel at 62.37 million tons has seen an even higher increase of 28.9%. (Economic Survey presented by Fin Minister Nirmala Sitharaman for the fin year 2022-23). As for exports, the figures for 2022 will likely surpass those of 2021.
As for scope for growth, despite its size, the sector contributes just 2% of our GDP, which is way below that of other countries with comparable economies. There is a lot of scope. Reasons for the industry’s growth are a steady growth in per-capita income that brings higher purchasing of everything where iron and steel are used. Secondly, a massive increase in infrastructure projects country-wide is evident in the form of massive rail and road projects, airports, and seaports.
What are the challenges before the Indian steel industry?
The steel industry in the Indian context faces quite a few challenges. With low per-capita incomes, capital-rich businesses such as iron and steel plants are in very few hands. Adding to the high cost of setting up such projects in India is an expensive debt component. According to a PWC report of 2019, it takes INR 7000 crores to set up a 1-tonne capacity steel plant that’s much higher than in other countries. All these go to making Indian steel uncompetitive.
India’s low per-capita income has other effects. It leads to low per-capita consumption of just 75 kgs compared to the world average of 230 kgs (that the government is trying very hard to bring to international standards). This keeps big players from investing in large projects. It was as late as a few years back that India finally started to use world-class technology in mining and producing I & S.
India has seen meaningful research and development in the field only recently. The outcome is that older plants consume more resources for every ton of output, besides being extremely polluting. But things are changing with recent plants by all the major players being state-of-the-art with world-class production at relatively low costs. The problem is with the plants set up in the 70s, 80s, and 90s.
Our power scenario is another area of concern. India still relies on public utilities for power production and distribution. With most public utilities operating outdated and inefficient plants, I & S companies rely on captive power plants running on coal or diesel, whose costs go up every time fuel prices rise. Options are slowly coming up in the form of renewable sources and hydrogen. But these carry their own challenges, including storage of generated power.
Digital disruption and application of emerging technologies – how are they affecting the Indian steel industry?
I & S plants take years to build and cost billions, with long gestation periods for RoI. Add to that India’s highly competitive I & S sector, which cuts into profits and delays RoI. The only thing that can bring change in such a scenario is digital disruption. Data of the past is used extensively to bring change not only in production but also in deciding product mixes, gauging customer needs, and rationalizing procurement of raw materials to bring about sustained growth, profitability, and customer retention.
Digitization today covers every part of business and production and is different from the past when they only assisted the human operator. Today it deals with every aspect, be it personnel, finance, production, quality control, or logistics, to continually locate and address gaps for higher productivity, higher quality, and lower costs. It also includes preventive and predictive maintenance to lower costs and machine downtime.
Where it has brought change is in the very way a product is made or a plant operated. Knowing customer needs and satisfying them using the right technology is the key. It sees the use of Industry 4.0, IoT, and Ai that let machines “talk” among themselves to bring about the best output. Digital twin, AR, VR, and MR help create scale models to understand each process better to bring change. With stakeholders everywhere, cloud computing is slowly giving way to stand-alone working. It’s taking decision-making to the next level while securing data from theft, pilferage, and ransom.
What is the road ahead for the industry?
The road ahead for the I & S industry is one of enlightened, analytics-assisted management that not only produces the best but does that while using resources judiciously. Iron & Steel are needs of humanity, but not at the cost of degrading the environment. With digitization and modernization, every stakeholder’s interest shall be addressed with higher productivity, higher quality, lower costs, better plant health, and most of all, while maintaining the health of the surrounding environment.
Sustainability is the new buzz word. How is steel industry complying to these new norms? What is green steel?
Sustainability will see the industry prosper with better products and productivity while maintaining the environment. To this end, the steel industry, considered one of the most polluting, is doing things in various ways like:
- Recycling. Steel is highly recyclable. A World Steel Association Life Cycle Assessment report states that with every tonne of scrap re-used, humanity saves over a ton of ore, 700+ kgs of coal, and 100+ kgs of limestone.
- Judicious use of bye-products. While I & S, as a rule, is considered “polluting,” the process brings out valuable by-products, including slag, sludge, and dust, which find application in industries as fillers and ballast that can save good, productive soil for things like agriculture.
- Judicious use of water. Not many outside the industry know that I & S production uses large quantities of water for cooling, de-scaling, or dust-scrubbing. The industry has taken steps to reduce its water footprint by recycling used water in special ETPs.
While the above steps have been in the offing for the longest time, the latest and most significant step is the use of hydrogen to reduce Carbon Dioxide (CO2) emissions in the industry. Blast furnaces and power stations use coal for their respective uses. These result in CO2 emissions of millions of tons. CO2, as we all know, has been responsible for global warming and disruptions. Replacing coal with hydrogen substantially reduces CO2 emissions. That said, it may not be all that “green” as of now, given that the process of extracting hydrogen is energy intensive and leads to the using coal and other non-renewable fuels, including methane. But hopefully, efforts are on worldwide to turn the process genuinely green.
Tell us about NEO Mega Steel
NEO Mega Steel came about in the year 2000 and is known for offering the entire gamut of Iron and Steel structural and infrastructure products, including a wide variety of Mild Steel Channel, Galvanized Iron Square Pipe, Mild Steel I Beam, and Mild Steel Seamless Pipes. These are manufactured to high standards by known entities in their respective fields with whom we have been associated for years.
With a staff strength of 500 spread across 11 locations, we are known to maintain good relations with reliable vendors-entities on the one hand and the best of customers on the other. We provide incomparable products and solutions every time and are genuinely delighted to see the response of our clients. It motivates us immensely.