SAIL plans to invest Rs 1.5 lakh crore to ramp up capacity

Kolkata: The Steel Authority of India, the country's largest steel maker, plans to spend Rs 1.5 lakh crore till 2030-31 to ramp up capacity to 50 million tonnes from 23 million tonnes.

SAIL Chairman CS Verma said on Wednesday the expansion proposal would be presented to the company's board shortly for approval. The state-owned steel maker indicated that the investment would encompass new projects as well as expansion of plants.

The company follows JSW Steel, Tata Steel and Rashtriya Ispat Nigam Ltd, in announcing expansion plans amid sluggish demand and the threat of imports on expectations the Narendra Modi government's policies will facilitate an economic revival.

India, the world's fourthlargest producer of steel, has set an output target of 300 million tonnes of steel by 2025. Steel production capacity expanded from about 75 million tonnes per annum in 2009-10 to about 101.02 million tonnes in 2013-14, when output was 81.7 million tonnes.

Last month, JSW Steel said it would add capacity to make its plant in Vijayanagar in Karnataka the largest at 20 million tonnes by 2022. The JSW Ispat plant in Dolvi, Maharashtra, will be expanded to 5 million tonnes from 3.3 million by March 2015 and eventually to 15 million tonnes.

"Our focus is on the domestic market," Sajjan Jindal, Chairman of JSW Steel, said recently, announcing plans to hike capacity in Karnataka, while adding that the group had set aside plans to acquire plants in Italy.

A Mumbai-based metals analyst, who declined to be identified, said: "The expansions are coming in a phased manner. Companies expect demand to pick up in the long run. In the short-run, the new capacities will function at a lower utilisation rather than optimum utilisation level."

Tata Steel will commission 3million tonnes of capacity at Kalinganagar, Odisha, by March-end, taking its total in India to 13 million tonnes. It plans to add another 3 million tonnes at the plant, though the timeframe hasn't been announced.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.