The Hindu Business Line : Paswan commits Rs 40 cr for SAIL Durgapur plant

THE Union Steel Minister, Mr Ram Vilas Paswan, has assured Rs 40 crore of fresh investment for the ailing Durgapur-based Alloy Steel Plant (ASP) of Steel Authority of India Ltd (SAIL).

According to a press release issued by ASP, the plant hopes to register operating profit during 2005-06, after the commissioning of the argon oxygen decarburization (AOD) unit.

"Tenders for the AOD are already floated and tenders for the other balancing facilities, namely oxygen plant, which would be implemented on a B.O.O (build-own-operate) basis and the new Electric Arc Furnace will be invited this month," the release stated.

According to plant officials, Mr Paswan has already committed Rs 40 crore for the first phase of investment. However, officials said, the Union Minister has not spelt out anything for the second phase of investment.

For the last few years ASP was seeking fresh investments to improve its quality and quantity of production. Its clients include organisations like Indian Railways, Union Defence Ministry, BHEL, Tata Motors, Bharat Forge and others.

"We are aiming to be in black within a couple of years and our strategy is to bring the losses down drastically. We hope to register operating profit in the next year," the release quoted Mr N.P. Jayaswal, Executive Director, ASP.

In 2003-04, ASP registered a loss of Rs 172 crore, which is marginally better than last year. In the first quarter of 2004-05, ASP's sales grew by a whopping 24 per cent to 28,300 tonnes compared to the corresponding period of the previous year.

Similarly, the sales turnover witnessed a quantum jump of 63 per cent in the first quarter from Rs 69 crore to Rs 112 crore, supported by a growth of 11 per cent in value-added products.

ASP sources said that the plant has already started negotiating with major ferro alloy suppliers for enhancing their capacities for meeting ASP's future needs. Analysts, however, remained convinced that for long run viability of ASP, investment for augmenting upstream and downstream facilities will be required.

"The plant needs captive sponge iron source to tide over the uncertainties of scrap availability. ASP also needs a finishing mill to make stainless steel merchant products for which ready market is already available," the sources said.