Shyam Steel director Lalit Beriwala (right) with president (projects) S. K. Bhargava in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury

Calcutta, Jan. 28: Shyam Steel has put its Kharagpur plant on hold and trimmed investment in the first phase of its Purulia project.

In February last year, the company had signed a memorandum of agreement with the Bengal government for a 1.1-million-tonne plant at Raghunathpur in Purulia and a 0.6 mt facility in Kharagpur.

The company plans to go ahead with the Purulia unit but will drop two of its components because of the economic slowdown.

“We will stop at sponge iron and pellet instead of moving further to billet and TMT bars in Purulia,” Lalit Beriwala, director of Shyam Steel, said.

The company runs a long-product mill — manufacturing TMT bars and structural items such as angles, channels etc — in Durgapur. The output from Purulia will cater to the Durgapur facility.

“Since the market condition is bad, we will not sell anything to outsiders,” he said.

Initially, the company had planned to invest Rs 2,000 crore in the first phase of the Purulia and the Kharagpur projects. The outlay has now been reduced to Rs 1,000-1,200 crore.

It has acquired 100 acres at Raghunathpur on its own and needs another 1,200 acres. “We hope to acquire another 150 acres on our own. The government has assured us the rest of the land,” Beriwala said.

Chief minister Buddhadeb Bhattacharjee is scheduled to lay the foundation stone for the project on February 17.

The company hopes to get at least half of the land so that it can commence the project by March.

Once the land is acquired, it will look to tie up funds from banks. The plan is to raise about Rs 650-800 crore as debt.

The first phase is expected to be completed by the first quarter of 2011, provided the land is acquired in time. In addition to land, Shyam Steel has sought 480mt of coal reserves from the state government.