Financial Daily from THE HINDU group of publications
Thursday, Sep 12, 2002
Industry & Economy
RSP, DSP `must strive' to be back in black
KOLKATA, Sept. 11
THE Durgapur Steel Plant (DSP) and the Rourkela Steel Plant (RSP), which have been all but served an ultimatum to earn profits, are ready to pick up the gauntlet thrown before them by Mr Braja Kishore Tripathy, the Union Steel Minister.
Mr Tripathy, who was in Durgapur on Tuesday to dedicate the blast furnace No 3 to the nation, told presspersons that DSP and RSP had been told to earn profits by the next fiscal.
"Nearly Rs 12,000 crore has been invested in them by the Centre and now the time has come for getting some returns,'' he said.
While DSP whose modernisation cost the Government over Rs 4,500 crore suffered Rs 119.33-crore loss in 2001-02, RSP whose modernisation cost is pegged at around the same level made a whopping Rs 645 crore loss.
"We have asked DSP to improve its performance so as to show a net profit this year and RSP to show a net profit by 2003-04,'' the Minister said.
The Managing Directors of both these units seem to be coolly confident that barring unforeseen circumstances these targets would be met. Speaking to Business Line, Mr Sanak Misra, Managing Director of RSP, said that this was, anyway, part of the strategic plan for the unit's revival, which was approved by the board of the Steel Authority of India Ltd (SAIL) early this year.
He said that RSP had a very small positive gross margin between June and August 2002 and if this trend continued the plant should be on the revival path by next fiscal, when a cash profit was expected.
The performance is expected to be bolstered by the fact that all four blast furnaces are expected to be operational by 2003-04, reducing production costs.
DSP, under Mr S.K. Bhattacharya as its Managing Director, is already making cash profits, but Mr Tripathy is keen to see the unit return firmly to net profits from this fiscal. "DSP now has to generate for SAIL,'' he said.
Speaking during the ceremony, he said that the blast furnace should help DSP honour the commitments made on earning net profits.
Mr Bhattacharya told Business Line that because DSP had a very high proportion of semis (nearly 60 per cent) it had difficulty getting good prices for its products.
He said that as the process of stabilisation of the reconstructed blast furnace continued, performance would improve only from the third quarter.
"We are confident of earning a net profit from the fourth quarter and will return to the black next fiscal,'' he said.
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