SAIL, Jaypee may team up for Bokaro cement plant

SAIL, Jaypee may team up for Bokaro cement plant
Published: 14 July 2006

The Jaypee group is leading the race to become the strategic partner in Steel Authority of India’s (SAIL) proposed cement plant at Bokaro. As per the plans, SAIL is to hold 26% stake in the joint venture (JV), while the strategic partner would hold the majority 74%.

Sources close to the development said there are as many as six companies in the fray. The cement venture will have a capacity of 2Mta. Significantly, Jaiprakash Associates (JAL) has already struck a deal with SAIL to be strategic partner for its first cement plant at Bhilai. The deal, signed late last month, envisages JAL holding 74% stake, while SAIL will hold the rest.

Sources said the private sector companies have already submitted their bids for the Bokaro cement venture and the evaluation process is currently on. The SAIL management is expected to hold negotiations with each bidder, before taking a final decision on the strategic partner.

Sources said as per the proposal for the cement plant, SAIL’s Bokaro plant would supply 1Mt of slag every year to the cement venture. SAIL is also likely to arrange limestone for the proposed Bokaro cement venture.

The PSU major is currently in the process of working out the investment and management setup of the Bhilai cement venture. As per the initial indications, while JAL, which will have majority of directors on the cement JV, is expected to appoint the managing director of the company, while the SAIL nominee would be chairman. Sources said the Bhilai model is expected to be replicated for the proposed Bokaro cement venture as well. The implementation of the project may take 2-3 years.

The Jaypee group, which has taken over the UP State Cement Corporation in a Rs 459 crore deal recently, is aggressively expanding its cement capacity. If it emerges successful in becoming the strategic partner for the Bokaro cement venture as well, this will help the group to increase the group’s total cement production capacity to about 20Mt. For SAIL, the foray into the cement sector through the JV route would be a win-win situation, as it would open a new revenue channel for the company, while being able to beneficially use the slag produced at its various steel plants.