Centre's nod for Vizag Steel's expansion plan likely by March

The Visakhapatnam Steel Plant (VSP) expects the central government to give its go ahead for its expansion plan by the end of March.

"We have submitted the expansion proposal to the government and we are confident of getting the government's approval by the end of this fiscal. We are going to complete phase-I of the expansion with in 36 months," Y Sivasagar Rao, chairman and managing director of VSP, told media persons here on Thursday.

According to the proposed modernisation of existing plant and phase-I expansion, VSP's production capacity will be enhanced to 7 million tonnes from the existing three million tonnes, he said.

For phase-I of the expansion the company needs Rs 8,250 crore, of which between Rs 2,000 crore and Rs 2,500 crore would be arranged through loans from financial institutions, while the remaining amount would be generated through internal resources, he said.

VSP, which since inception has been producing long products, would continue to do so, he Rao said. "After a market survey we found that there was still a lot of demand for long products in the country. VSP will continue the production of long products after the expansion," he said.

"By 2007-08 we will complete the first phase expansion, and in the second phase of expansion VSP production capacity will touch 10.2 million tonnes by 2011-12, he added. In the second phase of expansion we may go for flat products," he replied to a query.

In the current fiscal VSP expects to record a Rs 7,500-crore sales turnover as against Rs 6,180 crore in the last fiscal. "Our profits are expected to grow to Rs.2950 crore as against Rs.2073 crore during the last financial year," he said.

In the first nine months of current fiscal VSP's turnover was Rs 5,200 crore as against Rs 4,000 crore during the corresponding period last fiscal, a growth of about 30 per cent.

"To meet the domestic demand this year VSP neglected the export market. During the last year VSP's exports were Rs 768 crore, whereas this year our exports were only Rs.252 crore," Rao said.

VSP is trying hard to get captive iron ore mines. "At present we are paying about Rs 550 per tonne of iron ore. If we can get captive mines on our own, iron ore procurement cost will come down to between Rs 250 and Rs 300 per tonne. Keeping this benefit we are still trying to acquire iron ore mines. If we are not successful in this then we will go in for a joint venture with the state owned NMDC," he explained.

To mitigate the short supplies of coking coal VSP is taking initiatives to start joint ventures with foreign mining companies in Canada, Australia and Colombia, he said.