With the latest proposal of modernising the Indian Iron and Steel Co (Iisco) jointly with Russian company Tyazpromexport (TPE) failing to take off, SAIL is planning a Rs 500 crore revamp of the Burnpur-based ailing steel plant.
Sources in sail told PTI that a Rs 500 crore scheme has been drawn up by SAIL's Ranchi-based Centre for Engineering and Technology (CET) for Iisco's survival.
Stating that the scheme would make Iisco profitable immediately, the sources said, SAIL in all likelihood, would get funds from the Steel Development Fund (SDF). This would suit Iisco because of the low interest rates.
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In case funds were not available from SDF, commercial loans were being thought of. But in that case it would take 3-4 years to make Iisco profitable as the interest burden would be higher, the sources said.
Union steel minister Birendra Prasad Baishya recently said in Durgapur that there would be no joint venture and SAIL would take care of Iisco possibly with funds from SDF.
The plan to modernise Iisco with TPE failed to materialise with the refusal of the Russian government to release money from the rupee-rouble account.
The sources said now even a Rs 500 crore modernisation would be a shot in the arm for Iisco, virtually sinking due to lack of capital investment.
The current proposal included construction of a sinter plant, three twin-hearth furnaces, revamp of the rolling mills and supplementary facilities.
Debate was generated on the installation of twin heart furnaces as many technocrats felt that there was no point in installing twin hearth since the cost of production of steel by this process was higher by around Rs 2000 per tonne than that produced in basic oxygen furnace (BOF) or ID converters, they said.
But in view of the extremely limited resources now available for the modernisation programme, it was decided that twin hearth furnaces would be more cost effective than the present open hearth ones.
A new BOF shop with continuous casting facility would cost at least Rs 1,000 crore, the sources said. Iisco's rolling mills, although very old, were performing well and with some revamping, they could again be brought up to high levels of performance, the sources said.
From next year, they said, modernised Durgapur Steel Plant (DSP) of SAIL would be producing 0.9 million tonne of billets in its continuous casting plant.
The sources said DSP planned to set up a wire rod mill to process those billets, but with the present fund crisis in SAIL, further investment in DSP was not forthcoming till the plant was able to achieve the post-modernisation rated capacity.
SAIL, they said, was also toying with the idea if Iisco could take the billets from DSP and roll them into finished sections in its mills.
Senior technocrats who were involved in the planning process at Iisco for a long time felt that the patchwork update, now being planned, could be a first step, but Iisco had to move to a higher capacity, since a million tonne integrated steel plant was no more economically viable.
In Iisco's case it could take advantage of low interest and depreciation for sometime, the sources said, but ultimately the plant would require a heavy dose of investment for its survival.
They said SAIL would have to get a foreign partner to develop Iisco more or less along the lines indicated by the Japanese steel consortium. Iisco will also have to get a BOF shop at a later date.The proposed update plan would give Iisco the benefit for about 10-15 years.
Iisco was taken over by the government in 1972, but numerous proposals to modernise the plant had fallen through.
The biggest proposal was given by the Japanese consortium headed by Nippon steel corporation which envisaged a virtually new 2.2 million tonne plant at a cost of Rs 6,000 crore. (PTI)