The Steel Aut-hority of India (SAIL) has chalked out a Rs 5,000-crore expansion-cum-modernisation programme for its Bhilai Steel Plant (BSP) over the 9th Plan period. The main objective of the programme is to increase plant capacity by one million tonne.
The first phase of the expansion is already under way. BSP has worked out an investment outlay of Rs 450 crore for the current fiscal of which about Rs 220 crore has already been deployed till November. The capacity of the plant after expansion would be five million tonne per annum.
According to V Gujral, managing director, Bhilai Steel Plant, the expansion will be financed through internal accruals and external commercial borrowings (ECB). He emphasised that the focus in Bhilai would be on equipping the plant with technology which would enable it to compete with world standards.
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The capacity expansion has been necessitated by the recent move by the public sector steel major to shift its focus to exports in a bid to counter the on-going sluggish trend in domestic steel consumption, he added.
BSP accounts for nearly 80 per cent of SAILs total steel exports. The plant exported 491,000 tonne of steel till October, and expects to ship 790,000 tonne by the end of the current fiscal. Last year, BSP exported 443,000 tonne of steel.
The projects that would be taken up as part of the expansion plan include equipment additions to two steel melting shops, a new basic oxygen furnace (BOF) shop, rebuilding of two coke oven batteries, mine development and a 30mw power plant. About Rs 65 crore has been allotted for pollution control measures. Elaborating on the need for investing in capacity expansions, Suresh Pandey, executive director (works), said, New capacities that are being put in place now will come in use five to seven years from now when the global demand-supply gap is also expected to widen, particularly in the south-east Asian region.
According to a recent survey, the global demand for steel in the 2010 is expected to be 850 mn tonne. The steel-making capacity globally is 750 million tonne which implies there would be a demand-supply gap of 100 million tonne in 2010. About 40-50 per cent of this gap would be concentrated in the south-east Asian rim, said Pandey. Since gestation period for any steel plant is around 5 years, new capacities coming up would be in a position to benefit from this gap later, he added.
Speaking on the specific problems that pose a hindrance to domestic steel producers, Gujral said, in many ways it was difficult for manufacturers here to compete with global efficiency standards due to the serious infrastructure lapses.
For example in the case of power, overseas plants do not have the hassle of setting up a captive power facility because of the availability of a national power grid, he added.
The shift in focus to exports would not entail a change in product mix. The plant would, however, step up production of items, like plates, that have a specific demand in export markets. BSP has also been able to achieve import substitutions with some of its products.