The Corex unit was shut down in October-November 1998 due to some technical snag. Though the losses due to the close down were heavy to the company, senior JVSL officials in Bangalore declined to put a figure on the damage. During the last fiscal the company reported a net loss of Rs 28.14 crore on sales of Rs 532.08 crore.

A top JVSL official told The Financial Express that now the company was in a better position to meet the financial needs for effectively running the steel mill. It is understood that both IDBI and ICICI have now commenced disbursing the sanctioned funds with certain riders.

From July 18, Corex hot metal will be processed in the basic oxygen furnace (BoF) for steel making and continuous casting. The company's hot stripmill has already been in operation for nearly a year using procured slabs.

The reheating furnace has now been relined and the hot strip mill kicked off operations on June 20. By utilising the mill, one Corex unit, two BoFs and one continuous casting unit, the company would commission 0.8 mt of hot rolled coils/plates/sheets production from iron ore.

Jindal Praxair Oxygen Company, a joint venture firm between JVSL and Praxair Inc of the US, has already commissioned its unit for producing oxygen which would be available for the Corex plant from end June, the JVSL official said.

As per the business plan, JVSL would procure 30 per cent of steel slabs from India while 30 per cent would come from countries like Iran and Russia. The total hot rolled product to the market during the current financial year would be around 1 mt. The steel slab from integrated production would comprise about 40 per cent.

Around 60 per cent of the hot rolled products from JVSL would be further processed for cold rolling andgalvanising both for domestic as well as export market by the sister company Jindal Iron and Steel Company.

The rest of the hot rolled products would be marketed in Chennai, Hyderabad, Bangalore and Trichi. Being the only steel plant of its kind in South, Jindal Vijayanagar Steel would have basic economic advantage for marketing of flat products in the region. The company is investing about Rs 5,000 crore for its Toranagallu steel plant.

Jindal Tractebel Power Company, a joint venture between Tractebel and the OP Jindal group, has synchronised both the 130 mw units and 25 million units of power have been banked with the Karnataka Electricity Board. ``One of these units have now been decommissioned for certain rectification. However, with the commissioning of the second unit and back-up of KEB grid, the entire integrated commissioning would commence,'' the official added.

Insight

Move may have litle impact
The start of the corex unit is essential for Jindal Vijaynagar as only after thestreamlining of the steel melt shop can the management hope for a reduction in operational cost. But such cost reduction cannot significantly alter the company's fortunes.

Last year a technical snag saw the corex module ruled out for production for six months, which has also delayed the start of the second corex module along with its oxygen plant. This delay has caused the company notional loss of additional volume sales and affected cost of production, and will mean higher interest and depreciation charges. These financial fixed charges coupled with lower expected volumes from corex from this year, would mean that steel prices have to rise by more than 20-25 per cent for the company to come out of the red.

Manish Saxena