RSP net profit at Rs 55cr, to up capacity by 50%

Steel Authority of India Ltd's (SAIL) Rourkela Steel Plant has registered a net profit of Rs 55 crore in the first quarter of the current fiscal and is aiming to expand production capacity by about 50 per cent by 2011-12.

"It has signalled a turnaround and we now have a well-defined growth plan for the plant to raise hot metal production to three million tonnes and saleable steel production to 2.8 million tonnes in the next seven years,"Sanak Mishra, managing director of RSP, told reporters here last night.

He said about Rs 700-800 crore would be invested over the next four years in upgradation and expansion.

The plant, whose future was uncertain only a few years ago due to mounting losses, posted net profit in the first quarter which was a first in the history of RSP, he said.

"When I took over in 2001, my first task was to put the steel plant back on the rails. Though it did seem unlikely at that time, now it's firmly on the path to profitability and prosperity,'' Mishra said.

"The task before us is to secure RSP's future by attempting to ensure further cost reduction to keep it competitive, expand its capacity and reach out to customers," he said.

Mishra said RSP had made a cash profit of Rs 38 crore in 1995-96 after which it earned a cash profit of Rs 165 crore in 2003-04 on a 20 per cent growth in turnover at Rs3,800 crore.

It aimed at a turnover of Rs 4,000 crore during the current financial year. The plant, which used to operate at 66 per cent capacity utilisation three years ago was now functioning at over 100 per cent capacity utilisation, the managing director said.

This improvement along with plant efficiency, preventive maintenance, product quality, packaging, strict delivery schedules and focus on value addition were among the factors which made the turnaround possible, he said.

In order to enhance its profitability further, RSP was planning to rebuild its coke oven battery-I at the sanctioned cost of over Rs 112 crore, revamp the erw pipe plant at a cost of rs 89 crore, undertake major capital repair of blast furnace-iv "" the largest in the plant"" at a cost of Rs 118 crore and upgrade the equipment in captive power plant-I at Rs 32 crore, Mishra said.

The repair of the blast furnace-IV to be completed within the current fiscal, would not only give the plant the advantage of higher volumes but also enable it to cut production cost.

There were also proposals to add a 150 tonne converter and continuous casting machine to the existing facilities in the steel melting shop at a cost of Rs 120 crore.

"Besides, RSP intended to set up a new state-of-the-art 2000 cube metre blast furnace by 2009-10 which could cost anything between Rs 1,200 to 1,500 crore'', he said.

The RSP also planned to reduce its manpower, which stood at 24,000 today, to 18,000 by 2007-08 through natural and voluntary separation.