Q&A: C S Verma, CMD, SAIL

New Delhi : State-run Steel Authority of India Ltd (SAIL) has drawn up ambitious plans to invest over Rs 70,000 crore to increase its production capacity by two-thirds to 24 million tonnes in three years. But chairman and managing director C S Verma told Sudheer Pal Singh and Jyoti Mukul the Maharatna enterprise was now faced with the task of wading through the turmoil in the global and domestic markets and a fast changing mining regime. Edited excerpts.

A dip is being seen in only those markets which are saturated. Global capacity utilisation of steel plants is around 80 per cent, whereas Indian plants are running at 100 per cent. There is not going to be any impact on steel prices or demand in India. The World Steel Association has projected 13 per cent growth in the Indian steel demand in this calendar year and 14 per cent in 2012, compared to a 5 per cent rise elsewhere. India is the hub of industrial activity. Its infrastructure spending in the current Plan period is around $514 billion, which is going to grow up to $1 trillion in the twelfth Plan. All the parameters of the economy are robust and positive. A marginal dip in the gross domestic product growth does not make much difference.

We do not anticipate any upward revision in iron ore prices. For producing a tonne of steel, we require a tonne of coking coal and 1.6 tonnes of iron ore. Iron ore prices are already stabilised. Coking coal prices, hovering around $300 a tonne, will return to the normal levels in due course. These prices had gone up due to floods in Australia. So, coking coal prices have to come down by at least $40-50 a tonne. Therefore, the cost of production for steel will also come down. We were expecting this to happen this quarter, but this should happen before December-end. SAIL imports 75 per cent of its coking coal requirement. If there is a drop in coking coal prices, we will also have saving in the cost of production to that extent.