| SAIL chairman V. S. Jain (centre) in Calcutta on Saturday. Picture by Kishor Roy Chowdhury
Calcutta, July 19: The Chinese dragon is spitting fire and this time it is the turn of Indian steel companies to feel the heat.
The threat from China is so great that Steel Authority of India Ltd (SAIL) is thinking of putting on hold any expansion plan for the next two to three years.
Talking to reporters here today, SAIL chairman V. S. Jain said though China is now importing over 20 million tonnes of steel, by 2007 it will become a net exporter.
The current Chinese demand is mainly sparked by the Olympics that the country will be hosting in 2008. Once this major construction work is over, the demand pattern of steel consumption in China will undergo a sea change and the country will have to seek other markets to sell its products.
Jain, however, pointed out that production at its plants can be jacked up by overhauling blast furnaces and other steel-making operations.
Asked about investments required for the purpose, he said, “it will come in phases. We have to change the coke oven batteries in blast furnaces, each of which costs about Rs 150 crore”.
Jain said he expected steel prices as well as demand, which has started moving upward, to remain buoyant in the domestic market for the next few years.
Jain is also optimistic about the company’s turnaround this fiscal with a growth target of 7-8 per cent in production.
“Our target is to acheive about 7-8 per cent increase in production of saleable steel over the production of 10 million tonnes last year. For the next two to three years, we want to achieve an average growth of 6-7 per cent in production volume,” he said.
He said the company would henceforth focus only on its core areas. “Our plan is to outsource whatever we can in a cost-effective manner,” he added.
Jain was in the city to address the annual general meeting of the Indian Refractory Makers Association.
According to Jain, SAIL is yet to open the bids submitted by Jindal Steels for a 74 per cent stake in Salem plant and has formed a board-level panel to examine the disinvestment procedure to ensure transparency.
“We have formed a board-level sub-committee which is examining the procedures and is also interacting with the Tamil Nadu government. We want to ensure that the divestment process is transparent,” he added.
Noting that the reserve price has already been worked out by merchant banker Morgan Stanley, he said “the committee is setting parameters for the disinvestment.”
Jindal Steel, the lone bidder for majority stake in the plant, submitted its bid in January end this year.
The disinvestment process earlier faced problems due to opposition from the workers and the state government and forched a number of interested parties to pull out.