| On growth path
New Delhi, May 22: The boards of Steel Authority of India Ltd and Indian Iron and Steel Company are likely to clear a Rs 7,800-crore expansion plan chalked out for the subsidiary next week.
The clearance for the investment, most of which will be in the Burnpur steel works, is necessary for the cabinet to agree to Indian Iron and Steelís (IISCO) merger with Steel Authority of India (SAIL).
Initially, it was planned that SAIL will infuse about Rs 4,000 crore into IISCO.
However, after a review, Indian Iron and Steel directors were asked to prepare a plan on the basis of an in-principle clearance for the merger proposal put foward by the boards of both companies.
Around Rs 5,000 crore will be invested in Burnpur and about Rs 2,800 crore in IISCOís collieries and iron-ore mines. Chiria mines, Asiaís largest ore reserves, will soak upa little over Rs 2,000 crore of this sum.
IISCO, the oldest iron and steel company in the country, will invest in a 2,000-cubic-metre blast furnace, apart from renovating two blast furnaces, each of 1,170 cubic metres.
It will also set up a coke-oven battery (besides the two existing coke-oven batteries). A new sinter plant and a continuous casting plant are also in the pipeline.
Its steel melting shop, rolling mills and oxygen plant will also be renovated. The company aims to hike its existing steel-making capacity of 350,000 tonnes by half-a-million tonnes in a year-and-a-half to two years and take the total to 2 milion tonnes by 2011.
SAIL will fund the expansion plans from its internal resources, officials told The Telegraph. Development of Chiria mines is considered vital to SAILís expansion programme as the ore will be used at itsBokaro, Rourkela and Durgapur plants.
This explains why Steel Authority is eager to merge Indian Iron and Steel with itself and develop both the steelmaker and its rich iron-ore mines.
Sources said the steel ministry has sent a list of potential candidates for the post of IISCOís chief executive to the cabinet committee on appointments through the Prime Ministerís Office.
A director from Durgapur Steel Plant is believed to be leading the race for the post, which will be filled soon.
Sources said the merger proposal could also figure at a cabinet meeting soon and is expected to sail through.
The government feels it is the right time to merge IISCO with SAIL and try to revive it as steel prices are at an all-time high and IISCO is back into the black after decades.
Steel prices have risen by 250 per cent over the last two years and IISCO, which turned in a Rs 27-crore profit last fiscal after 30 years, is expected to nearly double its earnings this year.
Although the cabinet note on the issue does not state it, there is another reason for the governmentís hurry. The BJP-ruled Jharkhand government is trying to get back three valuable mining leases, which form the core of IISCOís Chiria mines.
If that happens, the expansion of SAILís Bokaro plant, Jharkhandís biggest industrial venture and largest-single employer, will come to a grinding halt, the Centre feels.
This will jeopardise production in plants in two other states ' Orissa Rourkela) and Bengal (Durgapur) ' and may lead to a new inter-state row.