The proposed JVC, to be set up adjacent to SSP, would have at least one lakh tonne per annum of stainless steel melting facilities to produce slabs of different grades. Land for the unit would be provided by SAIL.Company sources here said that SAIL was also interested in a tie up with the strategic partner of the proposed JVC for international marketing of the stainless steel products. SAIL has retained JM Morgan Stanley limited as financial advisors for the joint venture.

The sources said with the floating of the tender the speculation about the future of the Salem Steel Plant ended since the focus was now on the formation of a suitable JV for further development of the special steels unit. Stating that the installation of steel making facilities would cost between Rs 300 crore and Rs 500 crore, depending upon the kind of facilities to be installed, the sources said it was possible that the foreign bidders might opt to transfer their existing facilities to salem.

The sources said earlier NTK of Japan, Avestha Sheffield of UK, Gamma Synergies of Canada besides a number of Indian companies had made enquiries about the SSP. Now the name of the bidders would be known only after the tender closes on December 24. The sources said following the proposed backward integration at SSP, the Durgapur-based Alloy Steels Plant would make an exit from the flat stainless steel segment. Earlier, the facilities at asp and SSP were complementary as the stainless steel slabs produced at ASP were rolled at SSP. But with a sharp drop in the prices of stainless steel in the international market forced ASP out of this supply route.

Indian stainless steel market, the sources said, was growing at an annual rate of around 6 per cent and sail was not competitive in the high growth low nickel segment covering the applaiances and utensil market.

In the high-nickel industrial segment the company was facing tough competition from imports, the sources said adding that the two major disadvantages of ssp were the lack of steel making facilities and high interest burden resulting from the setting up of the hot rolling steckel mill.