Poor Infrastructure May Spur Rethink On Cr Mill

If work on infrastructure areas like the port and the railway line for Tiscos Gopalpur project does not pick up, then the steel major may have to look at alternative sites for locating its cold-rolling mill, slated to be set up as part of the first-phase of the project.

If it comes to the worst, we will have to look at alternative sites to maintain viability and avoid further delay. The obvious alternative choice for the mill will be Jamshedpur. We are heading for a situation where the new hot-rolling facilities in Jamshedpur will be ready before the Gopalpur cold-rolling facility, said a company source.

 

Getting the finishing done by a cold-rolling conversion agent, if Gopalpur is not ready to receive the hot-rolling coils produced by Jamshedpur, will mean an erosion of margins for the company.

The source said while land acquisition was progressing on schedule, we seem to be running in circles on the infrastructure front. There is nothing to show by way of progress in the last two years since the memorandum of understanding between the company and the Orissa government was signed in August 1995, the source said.

Emphasising that such a denouement will be against the wishes of the management which had chosen Gopalpur for the project, he added, this would perpetuating the dependence on a single cite like Jamshedpur which the management had wanted to avoid. Margins are vital because the entire steel industry, including Tisco, has just put behind a very negative second half 1996-97 where sales continuously declined. The fall has now been arrested but sales in April and May were still lower than in the corresponding period of last year.

Indicating that much ground needs to be covered, the source felt that it could not be said with certainty if the sales level the company reached last September would be bettered, even by the end of the current financial year.

There were, however, a few positive signs. Tisco had been able to sustain the price rise that it had put through in April, international prices were going up and the tight money situation, that had produced the deceleration of last year, had greatly eased.

Additionally, Tiscos cement operations were likely to go into the black in the current financial year. The rated capacity was being reached this month and consumers were paying a premium for the Tata Steel Cement brand. But the odds against turning in a very good performance in cement were high as the industry, like steel, had been a major victim of the industrial downturn.