We will reach full capacity in 2017-18: Vizag Steel Plant

PRATIM RANJAN BOSE JAYANTA MALLICK Kolkata | Updated on January 24, 2018 Published on June 16, 2015

P MADHUSUDANChairman and Managing Director,Visakhapatnam Steel Plant

Visakhapatnam Steel Plant is investing massively in capacity expansion during the down-cycle in the steel industry.

Having completed the 4 million tonne (mt) expansion project; the state-owned company is now busy modernising its old capacity. In an interview to BusinessLine, Chairman and Managing Director P Madhusudan says the company will have a brand new 7.3 mt liquid steel making facility in 2017-18. Excerpts:

When will you commission the added capacity?

Commissioning of 4 mt added capacity was over in April. We are now waiting for the confirmation of the Prime Minister to dedicate the facility to the nation, in July.

You are also modernising the old capacities. How long should it take to reach full capacity?

The modernisation project is underway and will take another two years. We will reach full capacity of 7.3 mt in 2017-18. The target for this year is to produce 5 mt hot metal and 4.1 metal mt of saleable steel.

Considering the subdued market conditions, will you be in profit this fiscal after providing for high depreciation and finance cost?

Considering that 80 per cent of the ₹12,000-crore capacity expansion was funded from internal accruals, our interest burden will be low. Any improvement in market conditions will help us remain in the profit zone.

What is the funding pattern for modernising old capacities?

Now that our internal resources stand invested, half of the ₹3,000-3,500 crore project cost will be financed through debt. The rest will come from cash accruals.

When do you expect market conditions for steel to improve?

I don’t think international prices are going up in the short term, as global majors have large over-capacity. But the growth initiative taken by the Government should drive demand in the domestic economy for another three quarters.

Will Odisha’s move to takeover three OMDC mines impact your raw material security?

We have a firm commitment from NMDC to supply raw material for up to 7.3 mt steel making capacity. But it’s true that we acquired OMDC to establish an alternative source for iron ore. OMDC has approached the designated authority (Mining Tribunal, under the Union Ministry of Mines) against the move.

We are hopeful that our appeal for return or renewal of mining leases will be considered.

You committed investments in setting up railway ancillaries away from the mother plant in Rae Bareli and Siliguri. Will they be profitable?

Railway projects are on cost-plus basis, so that makes a business proposition for us. Our returns are protected.

What happened to your plan to set up a slurry pipeline from Bailadila in joint venture with NMDC?

We wanted the pipeline to avoid dense forests and run along the highway. NMDC on behalf of the consortium engaged an agency for route survey and obtain permission from different States.

I am told the survey is over and MECON is asked to prepare a revised plan. Now NMDC and RINL have to take the final call.

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Published on June 16, 2015
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