The Hindu Business Line : Sinosteel may opt for buying co with land

Sinosteel is now examining certain proposals for taking up a controlling stake in an existing company, even a sick or loss-making one but which has the necessary land at its disposal.

New Delhi , Dec. 10

China's state-owned Sinosteel Corporation, which was planning to set up an integrated steel manufacturing facility in India with an annual capacity of around 3-5 million tonnes, is now examining certain proposals for taking up a controlling stake in an existing company, even a sick or loss-making one, but which has the necessary land at its disposal.

The change of plans follows the difficulties faced by foreign steel manufacturers such as South Korean Posco or Mittal Steel in acquiring land for their proposed plants, particularly after the land acquisition problem being faced by the Tatas for their proposed automobile plant in West Bengal.

According to informed sources, the visit of the Chinese President, Mr Hu Jintao, last month and subsequent speeding up of economic treaties between the two countries has propelled Sinosteel to move faster with its plans.

"The Chinese New Year is around the end of January and we hope that some clear decision would be communicated by the parent company to the Indian subsidiary by that time," company sources said.

"The company is considering several proposals and the time that had been spent was a good learning exercise," sources maintained.

In July 2005, Sinosteel Corporation was permitted by the Foreign Investment Promotion Board (FIPB) to set up a wholly owned subsidiary in India with a foreign direct investment of Rs 4 crore to undertake cash and carry wholesale trading of metallurgical raw and processed materials, auxiliary materials, metallic and non-metallic and non-metallic mineral products, non ferrous metal products and other items.

The amount of investments that may flow in for this plant would be finalised at a later stage after the location and scale is decided. However, going by the thumb rule of Rs 2,500 crore to Rs 3,000 crore investment per million tonne of greenfield steel capacity, the investment required could be to the tune of Rs 10,000 crore or more, industry sources said.

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