The Hindu Business Line : VSP expansion likely to be cleared today

THE proposed capacity expansion of the Visakhapatnam Steel Plant (VSP) from three million tonnes (mt) of liquid steel to 6.3 mt, cleared by the Union Government earlier this week, will be a shot in the arm for the industrial growth of Vizag and the surrounding areas, said Mr Y. Sivasagara Rao, Chairman and Managing Director.

At a press conference here on Saturday, he said the formal communication on the clearance would probably be received on Monday, and the work would start immediately. The expansion would be taken up in two phases at a total cost of Rs 8,692 crore, with a debt equity ratio of 1:1.

In the first phase, the basic steel making facilities would be expanded in 36 months, and, in the second, special bar mill and structural mill would be completed in 12 more months. The VSP would continue to produce long products in phase one in view of its brand image and to meet the envisaged demand for such products, Mr Sivasagara Rao said.

Wire rods (plain), special bars (plain), structurals, seamless pipes and semis would be produced, and the Rashtriya Ispat Nigam Ltd (RINL) would strive to increase the exports to 35 per cent of its production.

Answering questions on expansion, Mr Sivasagara Rao said there would be no problem for raw materials, as the plant would get the requisite iron ore through the National Mineral Development Corporation. The plant was also making efforts to get captive mines. Regarding coking coal, it was planning joint ventures with the US and Australian companies.

He said the additional employment generation may be roughly 2,000 after the completion of the expansion and during expansion some 8,000-10,000 people may get temporary employment.

On the question of environmental clearances, Mr Sivasagara Rao said there was no cause for concern and all norms would be complied with.

Mr P.K. Bishnoi, Director (Finance), VSP, said the plant would have to borrow Rs 4,300 crore to fund the expansion, but there was no proposal to go public for the purpose. He said there would be no problem in getting the funds.

Mr Sivasagara Rao said the plant had a good half-year during the current financial year.

The sales turnover was Rs 3,737 crore registering a growth of 11 per cent over the corresponding period last year. The domestic sales turnover was Rs 3,598 crore, and the rest were exports.

During the half year, the plant produced 2.05 mt of hot metal, 1.8 mt of liquid steel and 1.6 mt of saleable steel.

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