CASE STUDY ON STEEL PLANTS

SUMMARY
The given case talks about the steel plant projects started by the Government of
india. It wanted to set up 3 steel plants and there were 3 locations marked for it,
namely Vizag, Salem and Vijaynagar. Since these plants were PSUs, the pressure
was high from the government. The factors which affect the location of steel plant
range from the content of iron ore and coal as raw materials, to transportation (rail,
sea, air), connectivity, human resources, infrastructure etc. According to the factors
affecting the location of the plant, Vizag was ranked first, Salem second and
Vijaynagar third. So after the evaluation, steel plants were set up in the first 2
locations (Vizag & Salem) and they ran successfully. Afterwards, then PM Indira
Gandhi visited Vijaynagar and laid the foundation stone for the plant. But the
problem was that the plant could not be set up at all there and it appeared as just a
trick by politicians to fool the voters during elections. But then after some years, a
private enterprise after getting license, started that plant and brought latest
technology along with some other developments to make the plant profitable like
other palnts.
Q.1 What are the essential factors for locating a steel plant and why?
Ans. the most essential factors for starting a steel plant are the following:
1.
2.
3.
4.
5.
6.
7.
8.

Availability of raw materials- iron ore & coal

Availability of labour
Infrastructure (road, railway, sea, air)
Waste disposal facility
Climate
Community attitude
Effect on environment
Effect on health

Q. 2 Explain how political pressures and pulls effect decision making and delays in
starting industries?
Ans. India is the largest democracy in the world. But at the same time, it is the most
complex legal structure also since the procedures involved in any kind of work take
longer time than actually required. Same happens in the case of starting the
industries also, speciaaly which are under the direct control of the government. The
influence of politics and the political parties behind those politics is huge and causes
major problems such as delays in clearance of the projects, accusations, blockage of
funds, corruption etc.
Q. 3 Explain how it was possible to make Vijaynagar plant visible?
Ans. It was possible to make Vijaynagar plant visible (set up) only by bringing latest
foreign technology. So the private player JInal Group started that plant by bringing
technology and produsing only sheet products. They kept the minimum workforce
and executives to keep their costs minimum since inception. Meanwhile, broad

gauges were built and some problems were resolved on their own due to that. And
thus, that unit could become profitable in just 3 years only.
Q. 4 Technology, HR, natural facilities play vital role to start new enterprise. Explain
your views.