Role of EPC Contractor in Growth of Steel Industry Achievements & Unfinished Agenda

1. Role of EPC Contractor in Growth of Steel IndustryAchievements & Unfinished Agenda By : Mr. D.M.Shah Vice President & Head Minerals and Metals Business Unit Larsen & Toubro Ltd.

2. Steel production, Mt Growth of Indian Steel Industry Exponential Growth Decontrol Controlled Regime

3. Steel Capacity in India • Present Capacity – 63 MTPA • Growth Rate – 7.5% CAGR (2000 -10) Apprx. • Projected Growth Rate- 10% CAGR Apprx. • By 2015 India Second Largest Steel Producer

4. Major Steel Expansion Projects / New Projects • Steel Authority of India Limited • Tata Steel • RINL • Bhushan Group • Jindal Group • Essar Steel • NMDC • POSCO • ArcelorMittal

5. PSU Present Projects – Mode of Execution SAIL /RINL–Presently Undertaking Complete Iron making Area under EPC Route • Material Handling • Beneficiation • Pellet Plant • Sinter Plant • Blast Furnace • Coke Oven Successful completion of EPC Packages clearly demonstrate the choice of packaging

6. PSU Present Projects – Mode of Execution NMDC –Following Packages Envisaged thro EPC Route • Material Handling • Beneficiation • Sinter Plant • Blast Furnace • Coke Oven • Steel Melting Shop • Rolling Mill Complete Steel Plant under EPC Route - Emerging Scenario of Project Execution

7. Private Producers – Mode of Execution Tata Steel/ Bhushan Steel – Packages under EPC Mode • Material Handling • Beneficiation • Pellet Plant • Sinter Plant • Blast Furnace • Coke Oven Clear and Evident Advantages Observed

8. Emergence of EPC Companies Pre 1990’s Traditional Steel Plant Engineering Agencies Strong Construction & Execution Parties Large Manufacturing & Fabrication Units Huge Time and Cost Overrun Observed

9. Emergence of EPC Companies Post 1990’s Domestic / International Engineering & Procurement Parties Construction & Erection Agencies Emergence Full or Part EPC Companies Relative Improvement of Project Deliveries

10. Achievement - EPC Concept 2008 to Present and Beyond Dominant Role of EPC Players in Iron Making Increased Awareness of Customer and Graduation of Major Players into EPC Very Significant reduction of Project Schedules and Quick Achievement of Plant Performances

11. Reasons of Increasing Trend towards EPC • Committed Delivery - Single Point Responsibility • Superior and Optimized Engineering Solutions • Reduced Interface between multiple agencies • Shortened Schedule /Savings on Interest Costs • Base Contract Price – Fix on Estimates /Budgets • Clarity of Sharing of Liabilities • Faster Ramp-up and Achievement of PG ‘Core competence’ of Engineering and Project Management - best in hands of Experts

12. Challenges for EPC Players • Fighting the ‘High Cost of EPC’ Myth • Changing the mindset of Traditional Fragmented Approach • Suitable partnering for both – Tech’ologist / Local Executer • Enhancing Engg Manpower / Manufacturing Resources • Recruitment/ Training /Retaining Construction Engineers • Standardization of Commercial Terms • Rationalisation of Taxation Structure • Low Entry Barriers for Outdated Technologies Customer Support Required to Strengthen EPC Route

13. Unfinished Agenda Steel making /Rolling and Finishing Mill areas under EPC Mode Ensuring Downstream Steel Making Units to be similarly packaged like Iron Making so as to ensure interfacing and integration of the total plant . Encourage Technologists as well as Indigenous Players to come together to provide EPC solutions .

14. Way Ahead … We look forward to a more pragmatic approach wherein the huge challenge of increasing the steel capacity of the country to 160 MT is taken up in a manner which could not only ensure faster and quicker completion but overall could also help in saving the total project costs .

15. Thank You