Top three steel PSUs Steel Authority of India Limited, National Mineral Development Corporation and Rashtriya Ispat Nigam Limited will infuse Rs 13,000 crore (Rs 130 billion) this fiscal as part of their programme to expand production capacities to about 35 million tonnes in the next two-three years.
"SAIL, NMDC and RINL will together spend Rs 13,000 crore in the present fiscal on their respective expansion programmes with an aim to almost double their production capacities by 2011-12," steel secretary P K Rastogi told PTI.
SAIL and RINL at present produce about 18 million tonnes of the commodity. Navratna mining giant NMDC is in the process of setting up a three million tonnes per annum (MTPA)-steel unit in Chhattisgarh.
SAIL alone will see an expenditure of Rs 10,000 crore (Rs 100 billion) on capacity expansion this fiscal while the remaining Rs 3,000 crore (Rs 30 billion) will be spent by NMDC and RINL, he said.
SAIL is in process of implementing a Rs 54,000-crore (Rs 540-billion) modernisation project to take its production capacity to 26.3 MTPA from the present about 15 MTPA by 2011-12. RINL is working to double its production capacity to 6.2 MTPA in the given time-frame.
Despite the prevailing economic slowdown, the expansion programmes of these public sector entities are going on full swing, Rastogi said, adding that SAIL is likely to hit the capital market to raise funds for the capacity augmentation.
Moreover, the steel major had earlier said that it would look to double its capital expenditure for the current fiscal from the last fiscal's level, of about Rs 5,233 crore (Rs 52.33 billion) to fund its expansion programme.
Industry observers applauded the efforts of public sector majors to go-ahead with their expansion programmes amid the liquidity crunch and the slump in demand that hit the steel sector and said that many private firms have succumbed to the downturn and announced cut backs on their expansion plans.
"On account of the slump in steel demand, private steel major like JSW Steel has announced slashing of investments for their multi-billion dollars expansion programmes," he said.