Vizag Steel aims to wipe off losses by next fiscal

Visakhapatnam Steel Plant (VSP) is targeting to wipe off its entire accumulated losses by the end of next fiscal. VSP's accumulated losses were around Rs 4,900 crore by the end of 2001-02. The steel plant started to earn net profits from 2002-03.

Addressing a press conference on Friday, C Appa Rao, acting chairman and managing director of VSP, said: "We have cleared close to Rs 2,000 crore of accumulated losses from our net profits in the last two years. In the last fiscal, VSP earned a net profit of Rs 1,547 crore. Already, the steel plant registered an 80 per cent growth in net profits in the first six months of the current fiscal as compared to the last fiscal's corresponding period. So, we are confident of clearing the remaining Rs 2,900 crore of accumulated losses by the end of March 2006."

Even though the VSP's production units continued to perform well beyond their rated capacities ranging from 107 per cent to 123 per cent, the steel plant's hot metal production dipped by around 2 lakh tonnes in the first six months of the current fiscal due to the shortage of raw materials, particularly coking coal, Appa Rao said.

"VSP has produced 18.21 lakh tonnes of hot metal, 17.37 lakh tonnes of liquid steel and 15.43 lakh tonnes of saleable steel in the first half of the current fiscal. Apart from this, the steel plant produced over 4.3 lakh tonnes of special steel, which constituted nearly 29 per cent of the saleable steel, during this period," he added.

"To avoid the problem of raw material shortage, we have signed contracts with mine owners for the supply of coking coal up to March 2007. We are also trying to get captive mines to meet our future requirements," he informed.

VSP is in talks with the National Mineral Development Corporation (NMDC) and Neelanchal Ispat for some investements for its future expansion plans, Appa Rao said. "M N Dastur & Co will submit its feasibility report by the end of November for our first phase of expansion plan after which we will approach the government for its approval," he added.

"We are planning to invite investments from private parties on a BOOT basis for the first phase of expansion. In the first phase of expansion, we are planning to enhance the plant capacity to 5 million tonnes from the existing 3 million tonnes. For this, VSP can invest up to Rs 2,600 crore. For the remaining funds we will depend on private parties," he said.

Replying to a query, Appa Rao said: "We, however, may not increase the manpower even after completing our expansion. The existing manpower itself will be sufficient to run the 5 million tonne-capacity plant."