SAIL partner walks out of Salem SEZ

NEW DELHI: SAIL, country���s largest steel maker, may have to scout for a new partner for developing its the special economic zone (SEZ) at Salem in Tamil Nadu after IL&FS Infrastructure Development Corporation (IIDC) has decided to walk out of the proposed joint venture, a steel ministry official said.

���The PSU (public sector undertaking) will invite fresh expression of interest (EoI) from companies for jointly developing the Salem SEZ after the global market situation improves,��� he said requesting anonymity. The steel ministry has administrative control over government-owned SAIL. The government has about 86% equity stake in the company.
IIDC���s decision to quit the project is due to the current economic slowdown, he said. IIDC is the advisory and project development company of the IL&FS group.

A Sail official confirmed the development. ���SEZs are not the flavour of the season now. Things have dramatically changed since worst downturn months of October-December last year. SAIL is trying to get over from the losses it had incurred during that period,��� the official said on condition of anonymity.

Officials of IL&FS and IIDC could not be contacted.

SAIL will start implementing the SEZ project afresh after the economic situation improves, he said without specifying a time-frame. SAIL and IIDC had signed an MoU in September 2007 to develop the Salem SEZ through a special purpose vehicle (SPV). The proposed SEZ was to come up on 250 acre of surplus land near SAIL���s existing stainless steel facility in Salem.

The proposed SEZ was to be developed by under 50:50 joint venture by SAIL and IIDC. The SEZ was expected to develop manufacturing facilities architectural facades, railway applications, dairy plants, chemical and pharmaceutical plants, machines for the food processing industry, tubes and pipes, auto component, panels for lifts. SAIL had also considered dedicated port facilities for the SEZ and its own export oriented stainless steel in the zone.

Steel ministry officials said that additional investment in developing a SEZ at this juncture would not be wise but a view would have to be taken by the company board.