SAIL making JV with Posco, Kobe to set up plants

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31 Jul 2010

State-run behemoth Steel Authority of India Limited (SAIL) is all set to formally sign a joint venture agreement with Korean giant Posco by October to set up a 1.15 million tonne steel mill adjacent to its existing unit in Jharkhand at an expenditure of about Rs 12,000 crore. If the maharatna company has its way, it would also jointly build another mill with Japanese steel giant Kobe at Durgapur at an investment of about Rs 4,000 crore.
"We intend to sign the JV agreement with Posco by October for setting up a 1.15 MT special steel mill at Bokaro (Jharkhand) for which an investment of about Rs 12,000 crore was needed. As of now the Detailed Project Report (DPR) is being finalized, which would be in place by then," SAIL chairman C S Verma told The Indian Express.
Meanwhile, Posco is understood to have sought a majority stake in the proposed JV for the said project to share its finex technology, though it depends on government-to-government negotiations. But the steel ministry officials are understandably averse to letting go the majority stake. SAIL was also in talks with Nippon and Kobe steel companies of Japan for setting up other mills, Verma said. "Talks are on with both Nippon and Kobe. With Kobe, we are moving ahead on our talks to jointly build a 0.5 million MT steel plant at an estimated investment of about Rs 4,000 crore initially. As of now we intend to set up the plant at our Alloy Steel Plant complex at Durgapur (West Bengal), though nothing has been formally finalised. Then as we enhance the modules, further investments would entail."
The company is simultaneously executing its expansion and modernisation programe worth Rs 65,000 crore to ramp up its production capacity to nearly 24 million tonnes by 2012-13. As part of the exercise, the PSU has planned to invest Rs 12,254 crore in the current fiscal against an expenditure of Rs 10,606 incurred last fiscal.
Meanwhile, SAIL's net profit for the first quarter dipped by 11.5 per cent to Rs 1177 crore against the corresponding period last year owing to input cost escalations and lower sales volume. As per the results announced by the company today, it recoded a sales turnover of Rs 9931 crore for the quarter marking a 2 per cent increase. The PSU's profit before tax of Rs 1,749 crore dipped by 13 per cent. "In the first quarter, SAIL's cost on employees increased due to additional provision of Rs 299 crore towards employee-related benefits, compared with net reversal of Rs. 199 crore in the same period last year towards provision for revision of salaries and wages," Verma said.

Source: The Indian Express