The Hindu Business Line : Kudremukh Iron board to take a call on bid for DI pipes project soon

The profit-making Kudremukh Iron Ore Co Ltd (KIOCL), a PSU under the Steel Ministry, is now said to be at the crossroads with regard to its long standing (conceived way back in 1994), one lakh-tonne Ductile Iron Spun Pipe (DISP) project, which from the beginning has been planned as a value added adjunct to the Blast Furnace Unit.

Since the bugles have been sounded by India Inc on manufacturing growth slowdown and job cuts across industries, expansion projects planned even as a forward integration venture are now being viewed sceptically.

According to industry experts, the `mini ratna' PSU, set up in 1976, and which has faced ups and downs in its chequered history, now more than ever needs to conserve its resources and spend wisely. A global tender has been invited by KIOCL for awarding the turnkey contract for the Rs 300-crore DISP project, and according to informed Steel Ministry sources, only a single bidder has responded.

It is learnt that the opinion in Government is divided over awarding of contract to a single bidder in a PSU, as it may go against the established guidelines of Central Vigilance. The KIOCL board is expected to take a call on this soon.

Responding to queries by Business Line on the current status of the global tender for awarding the works contract for the DISP project on a turnkey basis, Mr K. Ranganath, Chairman and Managing Director, KIOCL, said bids have been received and a tender scrutiny has since been completed.

Order proposal

He clarified that the proposal for placement of order would be placed before the KIOCL board shortly. He expects the works contract to be awarded in January 2009. Project is expected to be completed in 20 months from the date of entering into the contract. Engineering consultancy contract has already been awarded to Mecon.

Admittedly, non-availability of a long-term mining lease and the absence of a captive iron ore mine have forced the company to procure iron ore at a market price that eats up a substantial share of its profits.

Mr Ranganath said in the absence of a captive iron ore mine, the minimum selling price of raw ore was around $50.

Market competitiveness

Asked about market competitiveness, he said the manufacture of ductile iron spun pipes, basically used in water supply, irrigation and water works, was a "thrust area" both in the Central and State government budgets.

On how competitive the Rs 300-crore project will be in the present market situation, when compared with similar ongoing DI pipes projects of private sector players such as Tata Metalliks (Rs 150 crore for a 1 lakh-tonne plant) and Jai Balaji (Rs 240 crore for 2.40 lakh tonnes), the CMD said the current economic recession has not affected the DISP industry, "and a recent market study also supports this view".

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