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SAIL fillip for IISCO

New Delhi, Oct 2: The Steel Authority of India (SAIL) feels that with no serious bidders for IISCO, it should not be put up again for re-bidding. Instead, it plans to invest in the company to raise steel output by about 60 per cent.

SAIl feels that the Burnpur-based steel-maker could be revamped with a slightly modified revival package. “There is no call for shutting down IISCO and it can turn profitable even with small investments, it is potentially a rich subsidiary with valuable mining assets,” SAIL chairman V. S. Jain said.

Jain said SAIL plans to hike Burnpur steel works’ output from 3 lakh tonnes to 5.4 lakh tonnes of saleable steel a year. This will be done by making a capital investment of some Rs 230 crore in the Burnpur works which will include investments in the sinter plant, two new blast furnaces and a new wire and rod mill.

Funds for investment in Burnpur steel works and another Rs 110 crore to be invested in IISCO’s mining assets will be raised from the market by SAIL. The loan is expected to be sourced cheaply as it is likely to be guaranteed by the government. Analysts felt it could be taken at a sub-PLR rate of as low as 7.5 per cent per annum.

SAIL’s decision to go ahead with investments in Burnpur comes despite the Cabinet’s refusal to fully fund a Rs 1,400-crore revival package for IISCO and to opt for a Rs 540-crore VRS programme instead, designed to rid of about 9,000 workers in all. Of this, the government will give a grant of Rs 186 crore while guaranteeing the rest.

Jain said SAIL planned to offer a VRS to some 6,000 people right now, mostly from Kulti works and IISCO mines. The SAIL move comes after Trinamool Congress leader Mamata Banerjee met Prime Minister Atal Bihari Vajpayee to protest the “shoddy” package for IISCO and the West Bengal government threatened to withdraw tax sops worth Rs 200 crore, if a revival package was not properly implemented.

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