July 25, 2008

SAIL and Kerala to form JV for SCL in April 2008

IANS reported that Kerala based Steel Complex Limited will be managed by Steel Authority of India Limited as a JV project. This will be SAIL’s first venture in Kerala as at present, it only has a steel depot at Kochi.

Mr Elamaram Kareem industries minister of Kerala said that "A rolling mill with 60,000 tonne capacity at an investment of INR 500 million will be set up at SCL by the JV. The draft of the MoU has been approved by the state cabinet and the board of directors of SAIL and the JV will come into being by April 2008."

Currently, the state government holds 93.2% stake in SCL while the rest is with private individuals. But in the JV, Kerala government and SAIL will have equal holdings. However, the management control will rest with SAIL.

As part of the agreement with SAIL, the government will consider settling SCL’s liabilities, which is in the tune of INR 1.03 billion. SCL expects a total investment of INR 2 billion from SAIL in the venture. Mr Kareem said that "We are ceding the management control to SAIL as this will bring in new technology. SAIL can also start the venture with a clean balance sheet."

He said that though SCL will initially produce iron bars for the construction sector, the government expects that the SAIL will undertake production of special steel at a later stage. He added that SAIL will find the steel plant handy as it will help it supply to a booming construction sector in the state.

The new venture will retain all the 195 employees of the SCL.