Sail Mulls Durgapur Joint Venture

Steel Authority of India (SAIL) is weighing the option of entering into a joint venture for setting up two finishing mills at Durgapur Steel Plant (DSP) to convert huge number of semis which constituted 50 per cent of the plants total production even after Rs 5000-crore modernisation.

The managing director of DSP, S B Singh said a four-member committee which is looking into the management of DSP semis, was now weighing various options since setting up a wire rod mill and a medium structural mill besides a bloom caster which would cost about Rs 1,500 crore.

Besides him, the committee included SAILs finance, project and commercial directors. The committee would submit its recommendations to the SAIL board for a final decision, he said.

 

Admitting that the proposal of putting up two finishing mills was in the companys corporate plan, he said, in the changed scenario, SAIL might enter into a joint venture with another company which would put up the mills and SAIL would pay it the conversion charge.

Asked when finishing mills are expected, the DSP managing director said the proposed investment for the purpose is spread over Ninth and Tenth Plan.

Singh said although the finishing mills were a must for increasing profitability of the plant, no new investment would come until DSP achieved the rated capacity which is the main thrust area after the update programme.

Admitting that capacity utilisation came down to around 75 per cent in the first quarter of the current financial year owing to capital repair of the blast furnace No 2, he said production started picking up in the second quarter. He said the operation of the plant was uneconomical since its inception but in the last three years DSP was earning a fairly high positive gross margin. But with high investment for modernisation, the interest and depreciation burden had increased manifolds.

The challenge before DSP was to gradually raise gross earning to a level where the plant could cover fully the interest and depreciation burden.

He expressed hope that if the present trend was sustained, DSP would be able to achieve rated capacity in the current fiscal.

In the first four months of 1997-98, Durgapur Steel Plant achieved a growth of over 16 per cent and 11.7 per cent in crude steel and saleable steel production respectively over that of the same period last year, he said. Singh said another blast furnace would be set up for which SAILs Centre for Technology (CET) was preparing report.

The modern blast furnace which would cost about Rs 100 crore is expected to come up by year 2000 when blast furnace No 1 would go down.

Stating that stock position in DSP was satisfactory, he said to make its presence felt in the international market, the plant decided to export 1.20 lakh tonne of continuously cast billets.

DSP had already exported 36,000 tonne billets in the first four months of 1997-98 compared to only 16,000 tonne exported last year. He said the Durgapur Steel Plant also started producing import-substitute loco wheels on a commercial basis and the railways already placed an order for 1,000 loco wheels. (PTI)