SAILing In Profits On Housing Scheme

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New Delhi, September 23:: Conceived as an employee welfare scheme, Steel Authority of India Ltd (SAIL) has turned the employee housing project as a major profit centre. The company hopes to earn around Rs 500 crore this year alone from the sale of houses.

This amount will also help the company meet the Rs 1,000 crore asset restructuring divestment target.

“SAIL earned Rs 200 crore last year as profit on sale/lease of houses, and this year we hope to realise Rs 500 crore through the sale of company property this year,” outgoing SAIL chairman Arvind Pande told FE, adding “besides the divestment of Salem steel, the sale of houses will contribute to the divestment target”.

Close to 25,000 houses will be put on the block in various steel townships this year.

SAIL launched a scheme for leasing of houses to employees/ex-employees which mopped up Rs 200 crore for the year ended March 31, 2002. Over 9,000 employees bought these houses in the steel townships.

Talking about SAIL’s proposed venture, he said the company is planning to set up a sponge iron plant, besides investing Rs 500 crore on capital projects this year.

“Sponge iron can be used as a replacement of scrap as worldwide there is a shortage of steel scrap which may be used for making steel,” he said.

The plant is likely to be set up in Orissa, but a final decision on the matter is still to be taken after a viability study of the project, he added.

The company has earmarked an outlay of Rs 5,000 crore as capital expenditure over a period of 2002-07. Besides Rs 500 crore in 2002-03, it plans to invest Rs 800 crore in 2003-04, Rs 1,000 crore in 2004-05 and Rs 1,200 crore in 2005-06 and Rs 1,500 crore in 2006-07.

The capital expenditure will be funded through market borrowings.

In this fiscal, a major part of the Rs 500 crore, Rs 300 crore will be spent on modernisation of rail mill at Bhilai in response to the Railways’ requirement of 76-metre long rails.

The modernisation of the cold-rolling mill at Bokaro will also be taken up in order to cater to the production of high grade steel for the automobile sector, Mr Pande said.

In response to customer requirements, Rourkela steel plant’s plate mill is being modernised, while a new finishing mill at Durgapur Steel Plant will be set up for wire rod mill.