SAIL puts on hold sale of 3 units

Upturn in the steel industry has brought down the losses at the units

Riding the upturn in the steel cycle, the Steel Authority of India Ltd (SAIL) has put the divestment of three of its units "" Salem Stainless Steel plant, Alloy Steel Plant (ASP) at Durgapur and Visvesvaraya Iron and Steel Plant (VISP) in Bhadravati "" on the backburner.

"We have brought down the losses of these three units considerably in the last two years," SAIL chairman V S Jain told Business Standard, adding, "We will now focus on improving their performance."

The three special steel units of SAIL had incurred an aggregate loss of Rs 400 crore in 2002-03, which was brought down to Rs 230 crore in the previous financial year.

For the current financial year, the special units are expected to post a net profit of Rs 150 crore, after wiping out the accumulated loses.

SAIL had tried hard to offload the three units in the past when the steel cycle was on the downturn. While ASP and VISP had failed to evoke a response, a few steel companies had shown interest in buying the Salem plant.

The Ratan Jindal-controlled Jindal Stainless had emerged the frontrunner for the unit. But the deal was not closed. Two years ago, the sale of the plant was entrusted to the Disinvestment Commission set up by the National Democratic Alliance. But nothing came out of it.

Potential investors had pointed out that the Salem plant does not make slabs, which are trasnported all the way from ASP at Durgapur. To make it viable, it was necessary to set up a smelting facility there.

Now, SAIL has also appointed M N Dastur & Co to conduct a techno-economic feasibility for setting up a steel smelting facility at Salem. "The best option will be adopted once the report has been submitted," Jain added.

Investments to the tune of Rs 55 crore is already in progress at the Alloy Steel Plant in Durgapur to allow more slabs to be supplied to Salem plant, where they are reheated and converted into rolls.

SAIL's fully-owned subsidiary, Indian Iron and Steel Co Ltd (IISCO) had also scripted a trunaround in the previous financial year with a net profit of Rs 27.09 crore compared with net loss of Rs 182.23 crore during 2002-03.

For the first half of this financial year, IISCO reported a net profit of Rs 90.46 crore. IISCO was declared a sick industrial company by the Board for Industrial & Financial Reconstruction in August 1994.

The Government of India in June 2002 had approved a revival plan of IISCO.

The BIFR approved the rehabilitation package in November 2003, which is under implementation.