Steel Authority of India Limited (SAIL) today signed a memorandum of understanding (MoU) with IL&FS Infrastructure Development Corporation (IIDC), for formation of a special purpose vehicle (SPV) to develop, operate and maintain a steel sector Special Economic Zone (SEZ) at Salem in Tamil Nadu. Mr. A.K. Jain, Executive Director (Corporate Planning), SAIL, and Mr. D.K. Mittal, Chairman & Managing Director, IIDC, signed the MoU. SAIL and IIDC will hold equity shares in equal proportion in the proposed SPV, which will be formed within one month to initiate the process of development of the SEZ.
Executive Director (Corporate Planning), SAIL Mr A.K. Jain (left) and Mr D.K. Mittal, CMD, IIDC, signing copies of the MoU
The application for approval of the SEZ shall be submitted shortly to the Government of India. It is likely to be considered by the Board of Approvals of the Ministry of Commerce in the month of October.
The SEZ is to be developed in an area adjacent to SAIL's Salem Steel Plant (SSP). SAIL will play the role of lead anchor by providing customised steel products to prospective units in the SEZ which could be set up to manufacture architectural facades, railway applications, dairy plants, chemical & pharmaceutical plants, machines for the food processing industry, tubes and pipes, auto component, panels for lifts, etc.
SAIL would gain from the proposed venture in the form of likelihood of assured demand for a part of SSP's stainless steel production, which is going to increase significantly after commissioning of planned facilities under SAIL's growth plan. In addition, SAIL would receive the benefits allowed to an SEZ developer in the form of land lease rentals, tax concessions and earnings from provision of services to the SEZ.
The MoU proposes that while SAIL will provide land, IIDC will provide advisory and other related services for the SEZ. IIDC is a wholly-owned subsidiary company of IL&FS (Infrastructure Leasing & Financial Services Limited), an investment banking institution, and is engaged in advisory and project development activities across diverse sectors. It specialises in providing integrated and comprehensive professional services towards development of infrastructure projects, from conceptualisation to implementation.