State-run Steel Authority of India (SAIL) today said it was in talks with Japanese companies for technology to set up a cold rolled grain-oriented (CRGO) steel manufacturing facility. The proposed 2.5-lakh tonne green field facility would attract investments worth Rs 3,000-3,500 crore, according to a senior company official.
SAIL Chairman C S Verma said the Japanese technology was one of the best technologies in the world for CRGO steel, used in transformers. He was speaking to reporters after receiving the ‘Icon of the Year’ award of The Institute of Cost & Works Accountants of India at the 52nd National Cost Convention 2011.
“We are in talks with few Japanese companies, including Nippon Steel Corporation, to make specialty steels.”
Asked whether the tie-up between Tata Steel and Nippon Steel Corporation (NSC) to set up a Rs 2,400-crore plant for producing auto-grade steel will affect SAIL’s talks with NSC, Verma said, “It will not. We are talking to them for a different purpose.” Arguing in favour of Japanese technology, he said, “They (Japanese) are able to manufacture steel without iron ore and coking coal resources inside the country and their margins are good and it’s one of the most profitable.” A consortium of SAIL and Rashtriya Ispat Nigam (RINL) intends to put up the plant, and Bharat Heavy Electricals itself has said it is interested in taking a 26 per cent stake in the joint venture.
He said the company’s follow-on public offer was likely to hit the market in mid-February. The state-run steel major hopes to raise Rs 8,000 crore from the first phase of the 20 per cent share sale programme. In the first phase, the government plans to divest five per cent of its stake in the company, while the steel giant will issue additional shares equivalent to a five per cent stake. Another 10 per cent stake will be sold under the second phase.
The government holds a stake of a little over 85 per cent in SAIL and after the offer, its equity in the company is expected to go down to about 69 per cent. He said the company was planning to expand its capacity to 23.5 million tonnes by 2012-13 at an investment of around Rs 70,000 crore, which had already been committed. By 2020, the company plans to expand its capacity to 60 million tonnes. Verma said SAIL was in talks with few state governments to set up iron ore mines, but declined to name them.
