Among state-run firms, SAIL has firmed up plans to raise its capacity to 50 mtpa by 2025, RINL hopes to have 20 mtpa by 2020 and the speed at which iron ore producer NMDC is moving, it may have around 15 mtpa capacity through direct holding and joint venture by 2020, said a steel ministry official.
Almost all domestic steel makers such as SAIL , NMDC and JSW are raising capacities, expecting a rise in consumption in the near future even as the ongoing difficulties due to subdued demand and rising imports are likely to persist for some more time. From the present installed capacity of around 100 million tonnes per annum, India aims to treble capacity to 300 mtpa by 2025-26 using greenfield as well as brownfield routes, entailing a whopping investment of USD 200 billion.
Among state-run firms, SAIL has firmed up plans to raise its capacity to 50 mtpa by 2025, RINL hopes to have 20 mtpa by 2020 and the speed at which iron ore producer NMDC is moving, it may have around 15 mtpa capacity through direct holding and joint venture by 2020, said a steel ministry official.
The government has already announced creation of at least four new steel plants of six mtpa capacity each through the SPV mode in Chhattisgarh, Odisha, Jharkhand and Karnataka. An MoU between SAIL and NMDC may be inked in the current month for fructifying the first SPV with over Rs 24,000 crore investment in Chhattisgarh. The details of the shareholding pattern of the SPV is being worked out, a SAIL official said.
RINL will be the principal investor for Odisha SPV, while NMDC will lead investments in the proposed SPVs in Jharkhand and Karnataka, said one official in RINL. Private sector firms too are stepping up capacity plans. JSW Steel has already let out its target of achieving 40 mtpa capacity by 2020.
from around 14.3 mtpa now. It has already sought the permission from the Environment Ministry to raise the capacity of the Vijayanagar plant by 60 percent to 16 mtpa. It also plans to raise capacity of its port-based plant in Maharashtra.
Tata Steel , which is been running a 9.7 mtpa steel plant, is commissioning a new steel unit in Odisha soon with 3 mtpa capacity. It also plans to double the capacity of the plant in the next three years. Essar Steel would rather concentrate on consolidation than on raising capacity further from 10 mtpa now, a company official said.
A number of firms including JSPL, Monnet Ispat and Energy and Visa Steel are also raising their capacities. Posco's unit in Odisha is also likely to start production much before the 2025 deadline for reaching the 300 mtpa capacity. "Even as the industry is facing a lot of problems now due to issues such as paucity of raw material, subdued demand and higher imports, they are raising capacity pinning hopes of a huge spurt in the domestic demand," said an industry analyst.
"The consumption of steel is almost set to rise with the government's thrust on infrastructure. Only thing that may derail the plans is imports. India needs to check that," he added.
India's steel consumption has been abysmally low for long time, but it has shown some signs of improvement in the recent times growing by 3.5 percent during the April-January period of the current fiscal. Per capita consumption of the country is nearly one-fourth of the global average.
SAIL stock price
On February 11, 2015, Steel Authority of India closed at Rs 73.20, up Rs 3.50, or 5.02 percent. The 52-week high of the share was Rs 112.90 and the 52-week low was Rs 54.05.
The company's trailing 12-month (TTM) EPS was at Rs 5.24 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 13.97. The latest book value of the company is Rs 103.30 per share. At current value, the price-to-book value of the company is 0.71.
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