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‘Not possible to work out mines’ profit separately’

business Updated: Oct 04, 2010 23:06 IST
Sumant Banerji

The country’s largest steel maker, Steel Authority of India Ltd, is going through a transition process. The public sector unit’s first phase of expansion that was envisaged back in 2005 is almost over and will be followed by another round of expansions that will see the company double itself to become a 60-MT steel producer by 2020. C.S. Verma, chairman, SAIL, spoke to Hindustan Times on his vision for the company. Excerpts.

What is the roadmap for SAIL's future expansion plans?
The domestic steel market is expected to reach 180-200 MT by 2020. At SAIL, we have set a strategic vision to retain our market leadership with various short-, medium- and long-term initiatives. Under our ongoing expansion plan, steel production will be expanded to 23.5 MT by 2012-13. To meet future challenges, SAIL is working on a long-term strategic plan “Lakshya 2020”, with the aim of achieving hot metal production capacity of 60 MT by 2020 and a market share of 30 per cent. This will help the company to meet its objective of achieving profitability through growth and customer satisfaction.

The new mining act proposes a host of policy changes, including a contentious 26 per cent profit-sharing cause with the tribals. Do you think such a step will help quell resentment with the local populace and is it a workable solution?
Any proposal or scheme for improving the life of people, particularly the poor, is welcome. The constitution of SAIL’s operations are such that it is not possible to work out profit or loss separately for the mines, as the mining activity is not a separate segment of revenue or profit centre.

Besides, steel companies having captive mines are not allowed to sell ore in the open market. Iron ore produced is for captive use only. In case of a mining company, the entire profit or loss is on account of mining. So whatever modalities for compensation are finalised, they need to be practical and implementable. We need to know whether this will form a part of the expenditure or the royalty.

How will such issues be ironed out?
There is an immediate need for building consensus among stakeholders on key policy enablers like the proposed MMDR Act and the R&R policy. All should work closely with the government on key aspects related to the growth of the steel sector.

What is the update on the SAIL-Posco JV?
The Detailed Project Report for the proposed SAIL-POSCO JV, for setting up a 1.5-MT greenfield steel plant is currently under finalisation. After being approved by the boards of SAIL and POSCO, we will enter into the JV and other related agreements.