VISAKHAPATNAM: With worldwide buoyancy and growing demand for steel, Visakhapanam Steel Plant is waiting with bated breath the long-awaited nod from the Union Cabinet for its ambitious expansion plan.

The situation is such that VSP is not able to cope with the burgeoning demand giving an anxious wait to its clients. The recent business summit - Vruddhi -- hosted by VSP in which major players in construction, steel technology and project management took part also underscored the urgent need to expand the capacity.

As a first step, it has been decided to remove bottlenecks in various departments to maximise productivity while waiting for the Central clearance to double the existing capacity by 2007-08 with an investment of Rs.8,529 crores. With an encouraging response to its notice seeking expression of interest (EoI) for part-funding of its expansion project from banks/financial institutions/consortium, it is not yet decided whether to go in for an initial public issue (IPO).

As per indications, it has been decided to adopt a cautious approach in keeping its options open by having a watchful eye on the market conditions.

VSP wants to mobilise most part of its requirement for the expansion from internal accruals. A sum of Rs.2,500 crores may be sought in the form of loans/debentures for a proposed term of five years. It may also consider suppliers credit in the range of Rs.1,500 crores to Rs.2,000 crores.

VSP is poised to gain further from the market trends, once it firms up its sources for raw material.

Right now, efforts are on to source its coal requirement from Orissa and Chhattisgarh, explore joint ventures with Canada, Australia and Columbia and manage some captive iron ore mines, along with National Mineral Development Corporation.

As per the draft national steel policy, the steel demand is expected to witness a quantum jump with boom time in construction, potable water, highway development and greenfield projects in airports and private ports. The per capita steel consumption is only 29 kg. as against world average of 140 kg.

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