SAIL doubles expansion plan to Rs 53,000cr

Company examining options for equity dilution.

Steel Authority of India (SAIL), the state-run steel company which has been given the Navratna status, has more than doubled its investment in its corporate plan-2012 which was conceived three years ago.

S K Roongta, chairman, SAIL, said, "The investment in the corporate plan would be Rs 53,000 crore to increase hot metal capacity to 26 million tonnes. Initially, an investment of Rs 25,000 crore was planned to increase the capacity from 13 million tonnes to 20 million tonnes."

Roongta said that the plan was not just about increasing capacity but also included technology upgradation and plant sustenance.

"The investment in technology and sustenance of facilities across different locations would be around Rs 15,000 crore," he said. The steel major has placed orders for modernisation and expansion of IISCO and Salem Steel Plant.

The investment will be funded through a mix of debt and equity. The debt-equity ratio would be 1:1, Roongta said.

When asked whether the equity portion could include dilution of stake in the company, he said, "I cannot disclose anything as of now. When the time comes, we will examine the options."

He said steel prices were at a healthy level and the next round of increase would to come from cost-push factors.

The company is also scouting for coal resources in Australia, Canada, Russia and Mozambique. It has formed an special purpose vehicle with five public sector units (PSU) in this regard.

However, the move does not preclude SAIL from going alone to look for resources abroad.

Alliance with ArcelorMittal on the cards

SAIL is examining options for a possible alliance with ArcelorMittal. Responding to queries on whether a partnership was possible for Chiria, the largest iron ore belt in Asia, Roongta said, "An alliance was possible in personnel and technology fronts."

The deal could be similar to the one it has with Posco. In August, SAIL and Posco signed an MoU to establish an strategic alliance for co-operation in different business areas.