Essar Steel to Reenter Indian Steel Sector via Kadapa Plant Soon
Essar Steel, which lost a long drawn battle for its Hazira steel plant in 2019, appears to be making a re-entry into Indian steel sector soon. The Hindu reported that YSR Steel Corporation Limited and Essar Steel are likely to reach an agreement in a couple of months on the financials and operational aspects of the integrated steel plant being set up at Sunnapurallapalle and Peddanandluru villages of Jammalamadugu Mandal of YSR Kadapa district in Andhra Pradesh at an estimated cost of INR 12,000 crore. The joint venture partners already have the debt-equity ratio in mind, but it is to be formalised by the State government on the basis of the recommendations of the SBI Capital Markets Limited, which has been appointed the transaction adviser.
Meanwhile, the State government is learnt to be trying to raise funds from the sovereign funds of the UK and Qatar among a host of potential sources, and the officials concerned are seized of the matter in order to start constructing the plant at the earliest. While the basic infrastructure, namely electricity and water, are in various stages of creation, the plan for laying a railway line from Muddanur has been changed to route it from the Jammalamadugu Proddatur line. This is because of the difficulty in negotiating the tough gradients and reserve forest (which requires environmental clearances) if a way is to be made from Muddanur side to the plant site. A bridge is to be laid on the Penna River in the alternative route, but the overall cost of the railway line is said to be significantly less than what is entailed by the line originally planned.
The Chief Minister wants the project to be taken forward without further delay as considerable time has passed by since its conception and choosing Essar Steel as the JV partner. He has directed the officials to be prepared to extend support to the Essar Steel to help in coping up with the vagaries of the market and overcoming certain financial constraints it has been facing for the last two years.
Andhra Pradesh Government has issued orders to induct Essar Steel Limited as the strategic partner for developing a high-grade steel plant under a joint venture in the Kadapa district of Andhra Pradesh in May 2021.Essar Steel was selected as recommended by SBICAP.