BUSINESS

SAIL not to set deadline for divestment

KOLKATA NOV. 13. The change of guard in Steel Authority of India is unlikely to have any impact on the tardy pace of its programme for disinvestment of non-core activities. Talking to newspersons here, the new chairman, V. S. Jain, said the company would not set any timeframe for disinvestment of Salem Steel, Alloy Steel Plant and VISL and the fertilizer unit of Rourkela steel plant. No deadline is set for resolving the crisis at IISCO either.

Though lack of bidders and unreasonably lower bids were shown as the reasons behind the failure to maintain the schedule, Mr. Jain said the company would not allow distress sale of its assets. The option of closure would not be exercised either.

While Jindals are expected to place the final bid on Salem Steel Plant (SSP) by the first week of December, which would in a way also decide the fate of the Alloy Steel Plant of Durgapur, lack of competition in the bidding process makes the company apprehensive about the outcome. "We are working out a reserve price for SSP," he said. Jindals in the meanwhile are reportedly working out a cost benefit analysis of incorporating ASP in the deal for cheaper supply of raw material inputs.

The SAIL chairman did not appear hopeful on the chances of divesting the fertilizer unit of RSP, either. Hinting at differences with the only bidder, Deepak Fertiliser, he said, "It might take time". The fertilizer plant, which was losing Rs. 5 crore a month, is now out of operation.

Giving a clear hint that proposals for attracting fresh investment in IISCO were no more viable, as globally there were little interest to invest in steel making facilities, he said the Rs. 340 crore bailout proposal, requiring Central and State assistance, is now placed before the Industrial Development Bank of India. The proposal among other things includes offering a special VR scheme for the workforce of Kulti works.

On the four integrated steel plants, Mr. Jain said the Durgapur steel plant was on the verge of making history by turning around. "The plant which was never profitable is making cash profits for the last two years and is now knocking the doors of a net profit". Though admitted that the plant badly needed a finishing mill, the SAIL chairman made it clear that the company was not in a position to make such investments.

Overall, "SAIL is expected to cut losses by 60-70 per cent this fiscal and if the current price trend continues it will record a net profit in the next fiscal". To this effect, all the plants were handed over a detailed production target averaging 10 per cent rise in productivity leading to an increase of Rs. 1,000 crores in turnover this fiscal. Costs will come down by another Rs. 500 crores. Sale or leasing of real estate will generate Rs. 250 crores.

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