July 29, 2003 | Business Standard
Tata Steel, Orissa form SPV for Gopalpur SEZ
Kolkata: Tata Steel and the Orissa government will set up a special purpose vehicle (SPV) for the proposed Gopalpur special economic zone (SEZ).
B Muthuraman, managing director, said the SPV will be set up for promoting the SEZ. Tata Steel is, however, yet to decide upon the extent of its holding in the SPV. The modalities are expected to be finalised shortly.
The advantage of a SEZ is that the Gopalpur port can handle deep draft vessels. Moreover, the steel ministry had also approached the railway minister for setting up a railway transport corporation in Gopalpur.
The Orissa government is also looking at converting the fair-weather port into an all-weather one. The SEZ will effectively utilise the 4,000 acre acquired in Gopalpur by Tata Steel for its proposed 10 million tonne steel plant, planned in the 1990s. Work on the project was never initiated.
The first phase of the mammoth project was estimated at Rs 7,000 crore. The land was acquired by displacing one village completely and four others partially. Three factors prevented Tata Steel from going ahead with its plan — no progress on the port, poor linkage of iron ore and non-availability of water.
However, to meet existing demand Tata Steel decided to augment capacity by adding one million tonne at its Jamshedpur plant. Commenting on the steel business, Muthuraman said prices were expected to be stable in the coming months. Tata Steel posted a 315.93 per cent rise in its net profit to Rs 267.07 crore for the first quarter ended June 30, 2003.
Net sales for the quarter grew 27.8 per cent to Rs 2,257.10 crore compared with Rs 1,764.93 crore. Analysts tracking the company said the steel sector is on an upswing and the trend is likely to continue, at least as long as China remained a net importer of steel.
While Tata Steel had already become economic value-added positive, the company is gearing up to manage the inevitable volatility of the cyclical steel industry.