Shareholders of Maharatna company Steel Authority of India Ltd (SAIL) unanimously approved the scheme of merger of Maharashtra Elektrosmelt Limited (MEL) with SAIL at the company’s 38th Annual General Meeting (AGM) held here today. The merger scheme under sections 391-394 of the Companies Act, 1956 is under consideration of the Ministry of Corporate Affairs. SAIL shareholders also approved the recommendation of the company’s Board of Directors for final dividend payment of 17% on paid-up equity, apart from the interim dividend of 16% already paid earlier this year, taking the total dividend payable to shareholders for the year 2009-10 to 33% on paid-up equity.
At the AGM, SAIL Chairman Mr. C.S. Verma informed the company’s shareholders that the Government has approved 10% Further Public Offer (FPO) of shares by SAIL and offer for sale (disinvestment) of 10% of the Government’s holding in the company in two discrete tranches. The total issue in two equal tranches will comprise fresh issue of 41.3 crore shares and disinvestment by the Government of its holding in SAIL of equivalent amount. Each tranche will consist of 5% (i.e. 20.65 crore shares) of FPO and 5% of disinvestment of Government’s shareholding in SAIL. The offers are to be issued at appropriate times in consideration of SEBI guidelines and prevailing market conditions. The first tranche is likely to hit the market during 2010-11, subject to Government and regulatory approvals.
Mr. Verma also informed that the company has made plans to set up additional incremental power generation capacity to meet the enhanced power requirement of its steel plants and mines in the coming years. “SAIL’s power requirement is expected to grow to around 1900 MW by 2012-13 from the current level of about 1180 MW. By 2020, the average load of steel plants, including the power requirement of mines, is likely to grow to about 4600 MW,” he said. SAIL will set up power generation capacity in a phased manner to meet this requirement. In the first stage, capacity of around 1725 MW is proposed to be set up and the balance in the second stage.
Informing the shareholders about the company’s short-term outlook, Mr. Verma said that to offset rising input costs, SAIL has laid a thrust on improving productivity across the organisation, “encompassing people as well as production facilities and processes.” To meet the enhanced iron ore requirement of about 43 million tonnes for hot metal production of 23.5 million tonnes after the first phase of modernization & expansion of SAIL is completed in 2012-13, the company is vigorously pursuing the issue of early renewal of leases of Chiria and Gua mines, besides augmenting production from its existing captive mines. The Chhattisgarh government is also being approached for speedy development of Rowghat mine. In order to meet the requirement of other raw materials like coking coal, low-silica limestone and dolomite, the company is exploring input assets acquisition on its own and also through its JV companies. “For securing raw material supplies, your company has co-promoted International Coal Ventures Private Limited (ICVL) with CIL, RINL, NMDC and NTPC for the purpose of acquisition of coal assets in overseas territories. ICVL is currently actively examining proposals for acquisition of equity stakes in coal mines in Australia, Indonesia, Mozambique and USA,” said Mr. Verma.
In addition to sourcing of raw materials, SAIL will “spread its wings and pursue overseas opportunities for marketing of products as well” Mr. Verma said in his address to the shareholders: “Developing countries like Africa and South East Asia are going in for huge infrastructure projects as part of their economic development plans. This provides a good marketing opportunity that SAIL can exploit. Your company intends to become a global player in the coming years.”
SAIL shareholders were also informed that the company is looking at increasing the share of value-added items in its product basket from the present level of around 37% to around 50-55%. “While our modernisation & expansion plan will take care of a great part of this endeavour by bringing onstream a number of facilities that will produce world-class steel to better feed sectors such as high-end consumer durables and automobiles, efforts are also on to develop new products that will fetch a premium in the market through R&D,” Mr. Verma noted.
Another focus area of the company will be technology leadership, said the SAIL Chairman. For this, SAIL has taken several strategic initiatives to augment technological interventions on a long-term basis. Giving examples, Mr. Verma said that “MoU has been signed with POSCO, Korea and a detailed feasibility study is being conducted to explore (a) Exploration of upstream and downstream opportunities based on FINEX technology which utilizes iron ore fines for steel making and (b) Manufacture and commercialisation of CRNO steel.” Besides, MoU has been signed with Kobe Steel of Japan for exploring the technical and economic feasibility of ITmK3 technology for producing premium grade iron in the form of nuggets. Dialogue on technology intervention in steel and related areas has been initiated with other leading steel producers as well, he added.
Among other strategic initiatives taken, Mr. Verma elaborated on the JV shipping company set up in partnership with Shipping Corporation of India in May this year for bulk transportation of SAIL’s cargo initially for 1.2 million tonnes per annum, which would be further scaled upto 4 million tonnes per annum. Mr. Verma also spoke on the JV agreement with RITES Ltd. for setting up a wagon manufacturing unit at Kulti in West Bengal, with a capacity to handle 1,500 wagons per annum. The unit will be set up in the premises of SAIL Growth Works Division at Kulti at an estimated cost of Rs. 85 crore. The state-of-the-art plant will be equipped for manufacture of 1,200 wagons and rehabilitation of 300 wagons per year in the initial stage. Besides manufacture of BOXN type wagons, the plant will also be able to produce specialised high-end wagons and modern stainless steel wagons with marginal investment in plant and machinery.
