Vizag steel to up production of value-added products

In a bid to overcome the competition from the secondary steel sector, Visakhapatnam Steel Plant (VSP) has decided to increase the production of value-added products.

"VSP is currently the market leader in the long products in the country. But now, as the market is also witnessing an influx of the long products from the secondary steel sector, we have decided to gradually increase the production of value-added products," Y Siva Sagar Rao, chairman and managing director of VSP, told mediapersons on Thursday.

According to Rao, the secondary steel sector contributes 60 per cent to the country's long products' requirements while the remaining 40 per cent is being met by integrated steel plants.

And of the long products supplied by the integrated steel plants, VSP has a 60 per cent market share, he said.

"While the plant's value-added products' percentage was 24 in 2003-04, it has increased to 28 per cent in 2004-05. VSP is now aiming at increasing it further to 30 per cent this fiscal. VSP produced 8.80 lakh tonnes of value-added products in the fiscal ended March 31, 2005, as compared to 8.02 lakh tonnes in the previous year," Rao said.

VSP's domestic sales stood at Rs 7,930 crore last fiscal, which is 97 per cent of its total sales turnover of Rs 8,181 crore, whereas the plant's domestic sales were Rs 5,400 crore in 2003-04, which is 87 per cent of its total sales turnover of about Rs 6,174 crore.

"With VSP concentrating more on domestic sales, the plant's exports reduced drastically in 2004-05. VSP's exports in 2003-04 stood at Rs 769 crore, and the exports were worth Rs 249 crore in 2004-05, which is only 3 per cent of the plant's total turnover," Rao said.

"In 2004-05, VSP produced 3.56 million tonnes of liquid steel, representing a capacity utilisation of 119 per cent, while it produced 2.89 million tonnes of finished steel, representing a growth of 4 per cent as compared to 2003-04. The plant's saleable steel production was 3.17 million tonnes. This performance is noteworthy given the fact that the plant had to throttle its production during the first half of the fiscal due to the severe coking coal crisis," he said.

VSP expects a 20 per cent growth in net profits in 2004-05 as compared to Rs 1,547 crore that it achieved in 2003-04.