Steel Authority of India chief wants merger with Rashtriysa Ispat Nigam; moots Rs40,000-crore expansion

Steel Authority of India (SAIL) chairman S K Roongta says a merger between state-owned companies SAIL and Rashtriya Ispat Nigam (RINL), for which a proposal is pending with the central government, would be a win-win situation. Roongta was speaking at an interactive session organised by the Merchants'' Chamber of Commerce in Kolkata.

>The Vishakapatnam-based RINL was a port-based plant while SAIL wasn''t, Roongta said, so there would be synergies in raw material usage, in-house technology and market access. RINL has a hot metal capacity of 4.15 million tonnes, and makes mostly long products. It is to be ramped up to 6.50 million tonnes by 2008-09.

Outlining SAIL''s ambitious expansion plan, Roongta said the company would achieve a capacity of 26 million tonnes by 2010, compared with its current capacity of 13.5 million tonnes. He said India would have a capacity of 200 million tonnes by 2020, of which SAIL''s market share would be 30 per cent.

Rungta ruled out a rights issue to fund SAIL''s Rs40,000-crore ($9.9 billion) expansion plan, saying that the company had a cash surplus of Rs10,000 crore ($2.5 billion); so 50 per cent of the plan would be funded through internal accruals and the remaining through debt. Roongta said that SAIL would first take up the modernisation of the IISCO plant in Burnpur at an investment of Rs10,000 crore.

He said following SAIL''s strategic tie-up with Posco, a working group had been set up to identify the areas of synergy. He also said that SAIL was happy at the progress being made by the Korean major on its India plans.

>He said that by 2014-15, India was likely to emerge as the second largest steel producer after China. On the rising demand for steel in India, Roongta said Indian infrastructure was at a take-off stage now and there were still many gaps that needed to be filled. "Steel is just one of the many critical inputs needed to sustain the economy''s nine per cent growth rate," he said.

>Except for power costs, SAIL was now a globally competitive company by most parameters, Roongta said, adding that SAIL was to launch a special purpose vehicle (SPV) with other PSUs to acquire a majority stake in coal mines abroad.

>MECON had been appointed consultants to study SAIL''s proposed greenfield project in Jharkhand, he said.