SAIL backs out from Sindri investments worth Rs 35k cr

Aug 10 2014, 01:39 IST
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SAIL’s proposed investment in Sindri was to be undertaken through special purpose vehicles. SAIL’s proposed investment in Sindri was to be undertaken through special purpose vehicles.
SummaryWas to set up fertiliser, power, steel plants at fertiliser corp’s unit

Steel Authority of India (SAIL) will no longer invest in the revival of the Sindri unit of loss-making Fertilizer Corporation of India Ltd. The plan was to set up a new 1.15 million tonnes per annum (mtpa) fertiliser plant, a new steel mill of 5.6 mtpa capacity and a 1,000 MW power plant at Sindri with a combined investment of R35,000 crore.

Sources in the fertiliser ministry told FE that SAIL has said it is not in a position to invest in the Sindri unit (in Jharkhand) and the company cannot wait endlessly to get all the clearances for the proposed investments.

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SAIL’s proposed investment in Sindri was to be undertaken through special purpose vehicles, with the steel maker roping in FCIL as partner in the fertiliser units and other entities from the private sector for the steel and power projects.

“SAIL has finally decided to walk out of the project after waiting for over three years to acquire land. The company has other more pressing commitments and managing funds for a new venture would also have created problems,” said a government official privy to the development.

SAIL’s proposal was approved by the Cabinet Committee on Economic Affairs (CCEA) in August 2011 and a new company, SAIL Sindri Projects Ltd, was created in November the same year. But land acquisition hassles put a break on the project.

A large part of the 6,500 acres identified for the Sindri project is either encroached, illegally occupied or transferred to other entities. SAIL needs about 2,500 acres for the steel plant, about 1,000 acres for the fertiliser plant and 500 acres for the power plant. But getting this much land free has been difficult.

The revival of the Sindri unit was earlier stuck, as FCIL was under the purview of the Board of Industrial and Financial Restructuring. But this was reversed after the Centre approved waiver of an about R10,000 crore loan and interests of the loss-making entity.

However, SAIL’s inability to proceed with the Sindri project may come as a blessing in disguise, as the company is on the verge of completing its R72,000-crore modernisation and expansion plans and needs to focus on investment in creating new steel capacity.

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