>SAIL (BONANZA)

Company Background
Steel Authority of India Limited (SAIL) is the leading steel‐making company in India. The company is a fully integrated iron and steel maker, producing both basic and special steels for domestic construction, engineering, power, railway, automotive and defence industries and for sale in export markets.

Investment Rationale

· Expansion Of Capacity‐ The company has plans to almost double its production capacity to 26 million tonnes of steel per annum from the present capacity of 15 million tonne per annum by 2010‐11 with the capex of Rs.54, 000.

· Expansion of Subsidiaries‐ The work relating to expansion and modernization of IISCO and Salem Steel Plant is progressing and contracts are being finalized.

· Steel Processing Units‐ The company in the process of setting up 11 Steel Processing Units (SPU) in 7 states where it does not have any production facility. The SPU will cost Rs 85 crore and will have an installed capacity of 1 lakh tonnes per annum. The SPUs will use products like hot rolled coils, billets and TMT bars produced by SAIL's main integrated steel plants to manufacture a wide variety of steel items
that can be utilised by the common man.

· Target for FY 10‐ The company has set the target to produce around 12 million tonnes of saleable steel and sales turnover of over Rs. 40,000 crore during financial year 2009‐10. We have however considered a lower turnover for the FY 10.

· Investment In Mining‐ The company has made the investment of Rs. 4000 Cr for mining projects in Orissa. This is part of the capex of Rs.54, 000.

· Joint Venture For Acquiring Coal Properties‐ International Coal Ventures (ICVL), the special purpose vehicle (SPV) is formed by five large public sector NTPC, SAIL, RINL, NMDC and CIL for acquiring coal mines abroad. This may improve the availability of coal for the company.

To see full report: SAIL