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Kohinoor Mandal

Rourkela , March 2

ROURKELA Steel Plant (RSP), the weakest of SAIL's four integrated units, is all set to book a net profit after a decade or so. In 2004-05, RSP expects to record a net profit of around Rs 800 crore.

The plant's turnover is expected to increase to Rs 4,400 crore from Rs 3,800 crore in 2003-04, despite the fact that its steel production was hampered during the first two quarters of this fiscal owing to a coking coal crisis.

After recording a gross profit before interest, depreciation and taxes in 2002-03, RSP registered a cash profit in 2003-04. (Net profit was recorded in the fourth quarter of 2003-04 too but not on annualised account as the plant had to clear employees' dues.)

According to Dr Sanak Mishra, Managing Director, saleable steel production is set to increase marginally from 1.5-1.56 million tonnes in 2003-04 to 1.6 million tonnes in 2004-05.

RSP is nearly a two million-tonne plant but its production in the past had never peaked to that level for various reasons, like the old blast furnaces.

"We would have increased hot metal production and subsequently saleable steel production if we had not faced the coking coal crisis, which started in February 2004 and went on till July-August. It really affected our production," Dr Mishra told Business Line.

Like all other steel plants in the SAIL fold, RSP took up several initiatives like coal tar injection and sponge iron injection to reduce its dependency on coking coal.

"We are using all available methods to reduce our cost of hot metal production and dependency on coking coal. In fact, we are trying to prepare a flexible system of hot metal production so that we can use the raw material judiciously according to market prices."

Unlike other SAIL units, RSP is a 100 per cent continuous casting plant and has enough capacity in finishing section mills to take care of its total crude steel production.

The unit does not produce any spare semis (semi-finished steel).

Despite this, RSP's average production cost is highest among all the SAIL units because its cost of hot metal production is the highest.

The extra cost is passed on to the finishing section and ultimately on to the final products.

According to Dr Mishra, there are ways of reducing the final cost of steel production even with the four old blast furnaces.

"If we can increase our total production we can succeed in reducing the per unit production cost."

High manpower is another worrying factor for RSP, but Dr Mishra said that the issue was never discussed with the employees in his weekly mass contact programme with workers.

The plant's current manpower stands at 23,000. By 2008 it is expected to come down to 18,000 through retirement and voluntary retirement schemes.

"By discussing it in public, I do not want to de-motivate the employees. Instead, I want their total commitment, and RSP's successful turnaround depends on it," Dr Mishra said.

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