SAIL to Set Up Nine Steel Processing Units in Six Indian States

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Researched by Industrial Info Resources (Sugar Land, Texas)--State-run Steel Authority of India Limited (BOM:500113) (SAIL) (New Delhi) plans to invest about $400 million to set up nine steel processing units (SPUs) in six Indian states where it does not have a presence. While only the land has been acquired for some units, other units are already under construction. Each unit has been planned with a timeline of 24 months from construction to production.

The SPUs are intended to meet the market demand for ready-made steel products. SAIL products, such as billet, hot rolled coil and thermo-mechanically treated (TMT) bar, will be used by the SPUs to manufacture a large variety of steel products for domestic use. The SPUs also aim to increase the consumption of steel in rural areas. This is in line with the goal of the National Steel Policy to enhance the annual per capita steel consumption from the present two kilograms to four kilograms by 2019--20. The SPUs will also contribute to the economic progress of the respective states by generating employment and catalyzing the setting up of small steel-based industries.

The foundation stone of the fifth SPU was recently laid in Billowa village in the Gwalior district of Madhya Pradesh. The $21 million SPU will manufacture TMT bars of two different diameters. This TMT bar mill project is expected to begin operating in 18 months and will have a capacity of 100,000 tons per year. The Gwalior SPU will also have a pusher-type reheating furnace, crop-cum-cobble shear, and a bundling and tying facility for TMT bars.

SAIL is setting up two other SPUs in Madhya Pradesh, one in the Hoshangabad district and the other in Ujjain. The Hoshangabad SPU is being set up with an investment of about $39 million and will produce transmission line tower structures and TMT bars. It will also have a 70,000-ton-per-year light and medium structural mill, and a 30,000-ton-per-year galvanizing mill, among other facilities. The unit is expected to begin production in 2 years. The Ujjain SPU will produce TMT bars in two diameters, and this will cost about $25 million. Both SPUs are under construction.

SAIL set up its first SPU in Betiah in Bihar with an investment of $59 million. This SPU is under construction and is being designed to produce 265,000 tons per year of TMT bars and pipes. The first phase of the unit is expected to begin production very soon. A second SPU in Bihar is under construction in Mahnar. It will produce 150,000 tons per year of black and galvanized tubes and 100,000 tons per year of TMT bars. The unit will also have corrugation and coil-cutting facilities. The Mahnar SPU is being set up in two phases at a cost of about $66 million.

Another state to benefit from SAIL's venture is Jammu and Kashmir. SAIL is investing about US $75 million in two phases in an SPU in Pulwama. The unit will have the capacity to produce 40,000 tons per year of TMT bars and process 60,000 tons per year of galvanized corrugated sheets. SAIL is presently waiting for certain environmental clearances from the state's Pollution Control Board.

Assam, Uttar Pradesh, and Himachal Pradesh are the three other states in SAIL's plans for SPUs. No progress has been reported from these states so far.

The Indian steel industry presently produces about 59 million tons per year, and production is expected to reach 124 million tons per year by 2012 and about 275 million tons per year by 2019-20. India seems headed toward becoming the world's second largest producer of steel within the next decade.

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