SAIL plans Rs 25,000 cr capacity expansion

Steel Authority of India (SAIL) - the steel behemoth - has planned an investment of Rs 25,000 crore for its mega expansion project, which envisages a production capacity of 20 million tonne per annum by 2011-12.

The company has charted a two phase corporate plan, which envisages a slew of capacity enhancements at its four steel plants - Bhilai, Durgapur, Bokaro and Rourkela.

V S Jain, chairman, SAIL, said, "The capital expenditure to achieve the targeted levels of growth is estimated in the region of Rs 25,000 crore by 2012. The first phase will entail an investment of Rs 4,000-4,200 crore by 2006-07."

While the capacity at the Bhilai and Bokaro steel plants will go up 2 million tonne each to 7 million tonne per annum and 6.5 million tonne per annum, respectively, the capacities at Durgapur and Rourkela will be enhanced by 1.5 million tonne each to 3.2 million tonne per annum and 3 million tonne per annum, respectively.

The company will finance the capex mainly through internal accruals. "We expect a cash flow generation of around Rs 3,000 crore per annum, which will enable us to take care of the bulk of capex through internal accruals," Jain said.

The company is also looking at moving up the value chain, with a focus on increasing finished steel production.

"We are looking at reducing the percentage of semi-finished products from the existing 22 per cent of saleable steel to 5 per cent by 2012. This will allow us to produce more value-added products," Jain said.

The company has also outlined several forward integration projects. The plan includes setting up a 1.1 million tonne hot strip mill, a 1 million tonne bar & rod mill and a 0.2 million tonne pipe plant at Bhilai and a 1.4 million tonne bar & rod mill and a 0.4 million tonne structural mill at Durgapur.

While a 0.7 million tonne plate mill will be set up at Rourkela, a 2.5 million tonne hot strip mill will come up at Bokaro. The Durgapur steel plant will be developed into a continuous casting unit.