"After 13 years of profit, we may be not be able to post profits during the current fiscal after undertaking the huge modernisation project," managing director of the plant AK Singh told a group of visiting newspersons here.He said there had been a cost overrun of Rs 1,100 crore in the modernisation project that gained momentum in the 1990's.

"Unless we have operating profits of at least 700 crore annually we will not be able to meet the depreciation costs and the interest burden," he said adding that sail by itself would register profits during the current financial year.

The targeted level of exports from the RSP for the current fiscal would not be achievable due to international market factors, Singh said. Exports from the plant during the fiscal 1997-98 were one milliontonnes.

"However, international steel prices are expected to firm up soon following anti-dumping duties and other protective measures being taken by the countries involved in steel production," he said adding rationalisation of domestic excise duties would also help in that direction.

Singh said the RSP could end the current fiscal with an output of 1.25 million tonnes of saleable steel as against 1.67 million tonnes during 1997-98.

Singh, however, ruled out any retrenchment of its staff in the immediate future adding the employees were trained for diversifying from their traditional areas of operation.

With new state-of-the-art continuous casting machines, the plant was set to achieve international competitiveness for its products, he said. Singh said that when RSP conceived the modernisation in the late 1980's, its products were being sold at a premium and was therefore planning to expand its production capacity.

But for the adverse factors in the international scenario, the situation would havebeen different, he said adding the country's steel majors were eagerly awaiting the kickstart of the express roads and other infrastructure projects announced by the government.

He said the plant had managed to keep inventories under limits and the current level was two lakh tonnes. "We usually keep at least one month of reserves for meeting any immediate commitment and we have managed to keep the inventory build-up to the minimum," he added.

"The major milestones crossed by the new units of the plant till December 31, 1998 are an eloquent testimony to the success of RSP's modernisation programme," Singh said adding modernisation was undertaken in two phases.The emphasis on quality from the raw material stage and through various processes to the rolling of steel products was the mainstay of the modernisation programme.

Environment management and energy were also accorded top priority, according to RSP officials. The second phase of modernisation concentrated on incorporation of major units like the newsinter plant, basic oxygen furnace, continuous casting shops and technological upgradation of rolling mills, they said.

The plant was presently undergoing a period of transition as the stabilisation of all the new units set up under the modernisation programme had been almost completed, they added.