The Hindu : Jindal Steel's rail mill on stream

Online edition of India's National Newspaper
Tuesday, Apr 15, 2003

Business

Business

Jindal Steel's rail mill on stream

By Our Staff Correspondent

KOLKATA. APRIL 14. The sponge iron major, Jindal Steel and Power Ltd (JSPL) will begin commercial production of rails in May.

According to sources, the 7.5 million tonne rail-cum-structural mill of JSPL that went on stream ahead of schedule in mid-February has already rolled out different sections of columns and beams required in the construction activity in the market.

The Rs. 396-crore project is being commissioned in phases to defer the impact of depreciation on the company's balance sheet.

Apart from breaking the current monopoly of the Steel Authority of India Ltd (SAIL) in supplying rails, the JSPL rail-cum-structural mill was expected to generate a business turnover of Rs. 1,200 crores including exports. The mill will also be the first to produce 120 metre long rails.

While a number of export enquiries are already received, the company is planning exports to China, Bangladesh and several Southeast Asian countries in the first phase. Though considers that the current track renewal programme has created enough room for more than one producer, the company is also exploring the prospects of selling rails to corporates building export logistics to ports.

The capability to produce a wide range of columns and beams will open the opportunities to tap a wide range of construction activity beginning from high growth areas of roads and bridges and housing to power plants.

While plans are afoot to make new investments, preferably in Orissa, to expand sponge iron capacities from the existing 6.50 lakh tonnes, JSPL is now focussing on reducing the debt and interest burden by way of conversion of portfolios and pre-payment of high cost loans.

As a part of this exercise, loans worth Rs. 200 crores were already converted into foreign currency loans and Rs. 60 crores were prepaid to ICICI bringing down the company's total debt burden and average interest cost to Rs. 800 crores and 8 per cent respectively.

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