Calcutta, May 2: Visvesvaraya Iron & Steel Ltd (VISL), now a unit of Steel Authority of India Ltd, is aiming at a financial turnaround in 2000-01 fiscal with an operating profit, and expects a net profit next fiscal.
Bhadravathi-based VISL, which was founded by M Visvesvaraya in the early part of the past century and made a unit of SAIL in 1998, incurred an operating loss of Rs 39 crore in 1998-99 and is heading for a similar loss in 1999-2000.
"Although we have been able to show growth in the physical parameters, the financial results for 1999-2000 were not encouraging as losses have continued to be in the same order as that of the previous year," VISL executive director R Kumar said.
He feels that once VISL is able to achieve an operating profit in 2000-01, it can aim at net profit in 2001-02. VISL is an old plant and its interest and depreciation burden is not very high.
The planning for its turnaround is based on stabilisation of the blast furnace and basic oxygen furnace. Kumar feels that the advent of supporting facilities in the mills and finishing zones should provide the cutting edge to enhance production of saleable steel.
VISL is planning to enhance its gross sales to Rs 333 crore in 2000-01 and further to Rs 365 crore in 2001-02.
It is one of the three special steels plants of SAIL which have been identified for hiving off into joint venture companies or disinvestment as SAIL has decided to concentrate on its areas of core competence. Special steels is not one of them.
A tender notice for a joint venture partner with minority participation by SAIL has already been issued for Salem Steel Plant in Tamil Nadu. Both VISL and Durgapur-based Alloy Steels Plant are due for hiving off into joint ventures or disinvestment in the second phase and their cases are likely to be taken up next fiscal.
The SAIL top brass believes that the financial turnaround of this old plant of VISL would help it to attract partners for joint venture. With a heavy loan burden and critical requirements of investment in its core areas, SAIL would not be able to invest in its non-core areas at least for a decade. Old plants such as VISL and Burnpur-based Indian Iron & Steel Co (Iisco) urgently need investments to keep them viable in the highly competitive scenario.
In 1999-2000, VISL recorded 11.44 per cent growth in sales in terms of value. It increased from Rs 256.58 crore in 1998-99 to Rs 286.85 crore. Growth of sale of alloy steels, in terms of volume, was 20.88 per cent, but sale of pig iron declined by 21.18 per cent as more hot metal was diverted for steel making.
VISL produced 69,063 tonne of saleable steel in 1999-2000, 20.2 per cent higher than the previous year. Its net sales realisation declined because of the continued recessionary trend in the alloy steels market.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.