Dreaming Steel Again Hansavivek HINDUSTAN ALUMINIUM CORPORA- TION (HINDALCO) is diversifying its activities into steel. It proposes to set up an integrated steel plant for the manufacture of hot rolled strips. The project, estimated to cost Rs 690 crore, is intended to be established in Raipur district of MR Besides, the company has undertaken a modernisation programme with a view to reducing the overall energy cost (including petroleum products) and to further lowering the cost of production of metal. For this purpose, an agreement has been entered into with Kaiser Aluminium and Chemical Corporation and Kaiser Aluminium and Technical Services, USA. The entire project, estimated to cost Rs 45 crore, will take a little over three years, Meanwhile, construction work relating to the expansion of the alumina plant is in progress and is the plant expected to be commissioned soon. The company's licensed capacity has been increased from 1.2 lakh tonnes to 1.5 lakh tonnes per annum and that of fabricated items from 37,000 tonnes to 55,700 tonnes. The company is seeking further expansion of fabrication facilities equivalent to 50 per cent of the primary metal production. The demand pattern of aluminium is fast changing. Hitherto, bulk consumption of aluminium was in the electrical sector. A huge potential for the use of aluminium exists in the shape of semi-fabricated items in the field of transportation, construction, agriculture and defence. The existing fabrication facilities of the company need modernisation to enable manufacture of aluminium extrusions in hard alloys and larger dimensions. New extruded profiles will have to be developed for truck bodykits, aluminium doors and windows, special defence applications and for agricultural needs. Similarly, rolling facilities need modernisation to cater to the demand for diversified end uses. The company has initiated action in this regard. It has also applied to the government for import of the fifth generator for Rcnusagar Power Company, its subsidiary, which is its captive source of power. HINDALCO was able to produce 1,23,646 tonnes of aluminium metal during 1985 as against 1,21,698 tonnes produced during the previous year, despite various constraints. Sales amounted to Rs 232.32 crore against Rs 220.30 crore and gross profit Rs 16.86 crore against Rs 16.38 crore, reflecting a small contraction of margins. Net profit, however, turned out to be lower at Rs 6.92 crore compared to previous year's Rs 7.45 crore. Equity dividend is maintained at 15 per cent and is covered 3.07 times by earnings as against 3.72 times previously. The directors have also recommended issue of bonus shares on a one-for-two basis by capitalising Rs 6.69 crore from the general reserve. For the purpose of financing a portion of the cost of modernisation scheme, the company has raised Rs 40 crore by the issue of 15 per cent non-convertible secured redeemable debentures of Rs 100 each at par by way of 'rights' to the resident preference and equity shareholders and debenture holders. The directors observe that the increase of Rs 371 per tonne in the price of aluminium allowed to the company on December 20 last was nowhere near the actual increase in the cost of production. This was offset by increase in the price of coal and a steep rise in power tariff by UPSEB. The cost of production on account of these two items alone has increased by as much as Rs 900 per tonne. Government is being requested to urgently compensate for this increase.