| Jain: Revving up
New Delhi, April 2: Steel Authority of India Ltd (SAIL) plans to jack up Indian Iron and Steel Company's steel-making capacity to 20 lakh tonnes from the current 3 lakh tonnes.
SAIL chairman V. S. Jain told The Telegraph that 'we have asked IISCO to draw up a corporate plan ... but we ourselves would like to take the capacity to 2 million tonnes in about six years or so.'
To increase production seven-fold, SAIL will have to invest nearly Rs 4,000-5,000 crore in IISCO.
With the government pushing ahead to merge the Burnpur-based steelmaker with SAIL, the latter has started charting strategies for IISCO's development beyond what the Board for Industrial and Financial Reconstruction (BIFR) had prescribed.
'The BIFR prescription requires small investments in sinter plants, which would cost another Rs 300-350 crore. We want to go beyond that ... I will see what the IISCO management draws up before taking a final view,' said Jain.
According to the SAIL chief executive, IISCO will require developmental expenditure of up to Rs 1,2000 crore in the medium term. 'What I am looking at is a two-phased plan for IISCO 'phase I till 2007 and phase II till 2011.'
SAIL wants to pay for the IISCO development from its own internal accruals, Jain said.
Both the government and SAIL want to push ahead with the merger and development proposals for two reasons ' steel prices are ruling at an all-time high and SAIL needs IISCO's mines in Jharkhand to feed the massive expansion plan it has chalked out for its Bokaro and Bhilai plants.
SAIL wants to double its steel production to 20 mt from the current 10 mt by 2011. It will be shovelling in 30 per cent of its new investment in Bokaro to raise its steel-making capacity to 6.5 mt from the present 3 mt.
The fresh investment plans come on the back of high steel prices that have buoyed the industry. Steel prices have increased by 250 per cent over the last two years and even IISCO, which notched up a Rs 27-crore profit after 30 years last fiscal, is expected to nearly double its profit this time.
The 125-year-old company was taken over by the government in 1972 and attached to SAIL as its subsidiary six years later. Since the take-over, the government has weighed some 11 proposals to modernise IISCO's Burnpur steel plant. But political and bureaucratic indifferences have stymied virtually all of them.