Rashtriya Ispat Nigam Limited (RINL) has proposed to set up a steel plant,pelletisation mill and a mining beneficiation unit in Orissa at an estimated investment of about Rs 2,500 crore.
The company has asked the steel ministry to facilitate setting up of these units and has asked the state government to give quality mines for the enterprise. This comes at a time when there is a perception of an impending gloom building up in the domestic steel industry.
In a proposal submitted to the Union steel secretary DRS Chaudhary on June 22,RINL chairman and managing director AP Choudhary said that his company would set up a 1 lakh tonne (LT) plant to be ramped up to 3 LT in the coastal state,4 million tonne (MT) pelletisation unit,and a 4-6 MT iron ore processing plant.
While about 800 people would be directly employed,hundreds others would benefit indirectly from the projects. The CMD told Chaudhary that RINL has registered nearly 200 per cent growth in its sales in the region. He suggested that once iron ore mines are allocated to the PSU,pellets would be would be converted into billets at the Vizag plant,which would be again brought back to Orissa for conversion into finished steel in the proposed plant. RINL has expressed its readiness to commission a study to identify the product mix and configuration of the steel plant based on market findings and to assess its techno-economic feasibility.
Choudhary said the funding pattern of the required capex will be based on the debt equity ratio of 1:1 and the estimated annual turnover from the sales works out to Rs 425 crore. Conceding that the annual rate of return may be lower than what steel plants consider viable (around 15 per cent),he said RINL considers these as strategic investments and the rate of returns may not be the only factor to indicate overall benefits
He cited a recent Morgan Stanley report,which forecasts that Orissa would be flooded with investments for manufacturing related activities in the same manner as Bangalore had attracted software investment in 1990s.