Vizag Steel cuts sales target 25 per cent on weak demand

Visakhapatnam Steel Plant (VSP) has reduced its sales target by 25 per cent due to sluggish markets.

The company had targeted to achieve Rs 20,000 crore sales turnover during this fiscal, but owing to prolonged sluggishness in the market it has revised it to Rs 15,000 crore, A P Choudhari, chairman and managing director of VSP, told mediapersons here.

"Last fiscal because of the recession the company reduced the steel price by Rs 5,000 on each tonne. In view of this, we have revised the targets," said, adding they however expect exports at Rs 1,000 crore this year compared with Rs 600 crore last year. The company is looking for more exports mainly on the back of dollar appreciation. To increase exports, VSP would soon set up its first overseas marketing contract office at Colombo, he said.

For boosting domestic sales, the company recently started seven new marketing contract offices across the country taking the total number of outlets to 30. It has also appointed 600 rural dealers to enhance the sales in rural market.

The company currently is a leader in long products and upon expansion expects to produce flat products and some new grades of steel like seamless tubes, for transmission line towers and corrosion-resistant steel etc. "With these new grade steels we can get more sales and therefore the company is putting emphasis on project sales. Accordingly, we are negotiations with the railways and defence to increase our project sales," he said. This year, the company is aiming to sell 700,000-800,000 tonne steel in the project sales category.

It is also looking at producing 3.47 million tonne saleable steel, an increase of 20 per cent compared with the last fiscal.

VSP has cash reserves of Rs 1,000 crore and its debt is at Rs 1,000 crore. It is planning to borrow over Rs 10,000 crore in the next 5 years to raise the production capacity to 12 million tonne by 2018-19, he said.