The Hindu Business Line : SAIL to raise hot metal production to 20 mt

STEEL Authority of India Ltd (SAIL) today unveiled its corporate plan 2012 that includes a decision to raise hot metal production from 13 million tonnes (mt) to 20 mt at an investment of Rs 25,000 crore.

This plan is based on the projected consumption of steel at 55 mt-60 mt by 2011/2012.

The first phase would involve an investment of Rs 4,300 crore, which will be until the period 2005/2007.

The increase in hot metal production from 13 mt to 20 mt would result in augmentation of production of crude steel and saleable steel to a level of 8.7 mt and 17.38 mt respectively.

There are plans to reduce production of semi-finished steel from the current level of 20 per cent of saleable steel to about 4 per cent in 2012.

The increase up to 20 mt will be spread across all of SAIL's steel plants - Bhilai Steel Plant will see production go up to 7 mt from 4.9 mt; Durgapur Steel Plant capacity will touch 3.2 mt from 1.98 mt; Rourkela Steel Plant will take its production to 3 mt from 1.73 mt and Bokaro Steel Plant to 6.5 mt from 4.1 mt.

This increase would push up SAIL's domestic market share from 26 per cent to 27 per cent of the projected domestic consumption at that time. Domestic consumption of steel is estimated to touch 55 mt-60 mt during 2011/2012 from the current level of 30 mt.

"If GDP continues to grow at 7 per cent, demand for steel should remain robust and touch 60 mt by this year," Mr V.S. Jain, Chairman, SAIL, told reporters in Mumbai on Monday.

However, the decision to increase production would be taken based on market realities at every juncture, Mr Jain said.

In the process of enhancing production, SAIL would not lose sight of its hold on the debt-equity ratio at 1:1. Currently, its outstanding debt is around Rs 7,000 crore. "We will try and maintain a debt-equity ratio of 1:1 even as we go in for expansions," Mr Jain said.

The expansion plan would involve realisation of full potential of existing assets, debottlenecking, linking facilities for value addition and capacity enhancement in growth segments. The areas identified for investments are development of iron ore mines, rebuilding coke oven batteries at Bhilai and Durgapur, revamping iron and steel making facilities at Bhilai, Durgapur and Bokaro, installation of one blast furnace at Rourkela, installation of auxiliary fuel injection systems in all blast furnaces in a phased manner and installation of new finishing mills.

The capital expenditure envisaged will be financed mainly through internal accruals and through market borrowings.

On iron ore and coking coal, two important raw materials for steel production, Mr Jain said the company is in talks with the Governments of Jharkhand and Chhattisgarh to extend agreement for iron ore mines. For coking coal, SAIL is in talks with several mining companies outside India including BHP Billiton. "Exploratory talks are on,'' he said.