Lenders put Usha Ispat unit on block

A lenders' consortium, led by the Industrial Development Bank of India (IDBI), has decided to sell the Vinay Rai-controlled Usha Ispat's pig iron plant at Redi in Maharashtra by invoking the provisions of the Sarfaesi Act, 2002.

The company's secured borrowings amounted to nearly Rs 1,800 crore by end of 2003-04, as it failed to implement its integrated steel plant project.

The sale would include 750 acres of land near Redi acquired for setting up the steel plant, a banking source said. Usha Ispat officials could not be reached for comments.

The cost of the plant at Satarda near Redi was first estimated at Rs 1,400 crore by IDBI, and, subsequently, it got escalated to Rs 2,400 crore.

The plant, located on the Maharashtra-Goa border, has remained shut since March 2004, when the last of its three operational furnaces were shut owing to acute shortage of raw materials.

A lot of steel companies have already shown interest in acquiring Usha Ispat's assets because of its strategic location.

The plant has the advantage of being located close to a jetty and raw material source. Also, a large part of the demand for steel comes from western India.

"Many of those interested in acquiring the plant have visited the facility and consider it a good investment," a banker said.

The Redi plant was commissioned in March 1994 with an installed capacity to produce 300,00 tonnes per annum of pig iron. Sources added that much of the machinery meant for setting up the plant, which had already arrived, lays rusting. A railway sliding had also been constructed for transporting raw materials and finished goods.

A steel analyst said Usha Ispat had used Chinese-made blast furnaces as furnaces imported from western countries would cost more.