| Silver lining
Durgapur, Jan. 19: Backed by a strong performance in the current fiscal, the loss-making Durgapur Steel Plant (DSP) hopes to turn around in the next financial year.
The plant has already made a cash profit of Rs 35 crore during the first nine months of the current financial year. It even hopes to post a net profit in the last quarter.
Cash profit in this quarter may exceed the plant’s total cost of production.
“We may not be able to book a net profit for the whole of the current fiscal, but for next year we are more than 100 per cent sure of registering a turnaround,” said managing director S. K. Bhattacharya.
The plant is working hard to break-even provided the demand and prices in the steel market remain intact, he added.
The plant’s total interest and depreciation charges are Rs 141 crore and Rs 303 crore, respectively. Durgapur Steel made a cash profit of Rs 32 crore last year.
Bhattacharya said that the plant’s product mix, which constitutes more than 55 per cent of semi-finished steel (semis) products, is the major roadblock for making a turnaround.
“Even if steel prices are slowly looking up, the prices for semis are still far from being corrected. If we had finishing mills, we would have made profit in the current fiscal itself,” he said.
While further investment to set up finishing mills is yet to come, the plant management is trying to produce some special steel with the help of Alloy Steel Plant, another unit of the Steel Authority of India.
“We have already given about 20,000 tonnes of steel ingot to the ASP for conversion,” he said.
The plant has set a first-ever target of producing 1.95 million tonnes of saleable steel this year.
“We are trying to reduce the overheads drastically while increasing our capacity utilisation in order to narrow the gap between the net sales realisation (NSR) and cost of production,” he said.
The NSR of the company is close to Rs 11,900 crore while the cost of production stands at slightly more than Rs 12,000 crore.
DSP is planning to set up a wire rod mill and a bloom caster with an investment of around Rs 300 crore.
However, fresh investment will be considered once the plant records its net profit.