Have got clearance for phase I of Raigarh project: JSPL

Q: Take us through what's the situation in Orissa first now? The environment ministry’s call to take action against you — has that been resolved?

A: We had got a letter from environment ministry about Orissa project. We made presentation to them and we explained them everything. Subsequently, they said okay. So the project is already on and they have cleared the whole thing and subsequently they have returned to the Orissa government to initiate action if there are violations under the Forest Preservation Act and Environment Act.

We are waiting for the Orissa government to do something and we will respond to Orissa government — whatever they do under the act because we feel that there is nothing, which really requires for action and there is nothing wrong that has been done and there is no violation. So we will respond to the Orissa government subsequently.

Q: Which way do you think this is going to go because for a lot of companies like yours issues with the environment ministry have basically headed to court? Do you think this may get into a litigation loop?

A: We really don’t know so far. The ministry has written to the Government of Orissa to initiate actions. We will wait for what action the Orissa government takes. But finally, we don’t know really what the Orissa government does. It may go to court and they may ask us for some information. We give it to them and let’s see what happens.

But even if it goes to the court, we are in a position to present our case whether to the Orissa government or to the court properly. So we really don’t know at this stage.

Q: Can you update us on what’s happening with your power project plant at Raigarh? How much has been cleared and on that as well do you have clearances from all the required or requisite ministries?

A: Yes, Ministry of Environment again cleared the 2400 megawatt. They’ve said that for a 1200 megawatt where the coal link has already been given subject to certain things, we can go ahead with that project. The work will start shortly on that project. Once we comply with the minor conditions, which are there, but 2400 megawatts should be ready in the financial year 2012-13.

We are doing all that is best possible. Once we will get the clearance, we will try to expedite the work on that project and try and complete it in the financial year 2012-13.

Q: Just to come back to the business, merchant power realisations had actually gone down quite significantly at the start of the year. Has there been some stabilization in those prices since then and are State Electricity Boards (SEB) now picking up power more than what they were doing earlier?

A: Normally in April-May and June, we see the demand for power coming up. But what is happening now that when the merchant market started opening up in last 2 years then the total market was largely for daily basis like what you see the rates on power expenses to six-eight months. But nowadays increasingly we are seeing a trend coming up for 1 year, 2 year and 3 year. There are large number of SEBs coming up to buy power for one-two-three year basis and there are lot of tenders floating around for that.

So for one-two-three year there is a good rate. It’s a comfortable rate and the demand is there for this medium-term. So many companies are primarily aiming at one-two-three year power market now rather than depending on this extremely short-term market.

But coming to your specific point, the power market on an extremely short-term, like one month basis or a day head basis, is firming up and for the first quarter normally it’s always high.

Q: What's going on in the steel market? How are realizations and prices moving there?

A: The steel market is little soft this time. In fact, in the March month it is a little soft world over and in India too. What has happened that that the steel market — the steel prices have gone down, something about USD 30-50 internationally and so is in India something about Rs 1,000 per metric tonne. Iron ore prices had also has gone down slightly. So to that extent it is okay.

We can say that some predictions, iron ore prices getting pass onto consumers also. But primarily, the demand side is low this time, maybe because inventory clean up, financial year-end. There maybe some build up of inventories from the next quarter onwards and the demand will come back again to coking coal price, which affects the steel prices also. There is no let up in the coking coal prices and price remains very firm.

Q: One word on what’s happening with the steel universe and whether over there you are seeing any pricing traction because the bigger concern is what’s happening with metals courtesy China and the way it’s crunching down?

A: No, internationally we are not seeing any sign of prices crumbling as such or demand crumbling anywhere. In fact, some demand has gone soft because what we are seeing unrest in some part of the world Middle East and the other countries.

People have become a little cautious in their purchases and they are not holding much inventory and they are also postponing their project expenditures and delaying it for a while that’s a precisely the reason.

But otherwise, we don’t see anything happening to steel demand worldwide and there is no reason to worry about.