Sources in the joint plant committee (JPC), a government body that manages the SDF, said Tisco is all set to get this loan from SDF as its CR products will meet the special needs of the automobile industry and substitute imports of those items.

As on March 31, 1998, Tisco's contribution to the SDF was Rs 1,053 crore and it has taken loans of Rs 1,215 crore from the fund.

"Tisco has applied for a Rs 600 crore loan for its CRM project. The issue will be discussed at the SDF managing committee meeting to be held on January 4, 1999," committee executive secretary SK Sinha told The Financial Express.

A senior official of Tisco's CRM project said that out of the estimated project cost of Rs 2,335 crore, the Industrial Development Bank of India has already sanctioned Rs 500 croreand Rs 811 crore will come from internal accrual. The CRM project will require foreign exchange to the tune of Rs 424 crore, a large part of which has been tied up.

He said, the mill will have a capacity to produce 1.2 million tonne (mt) of CR coils a year with widths ranging from 1,250mm to 2,000mm needed by the automobile industry. At present, other domestic producers can produce CR coils up to a width of 1,250mm which is not suitable for this sector. As a result, the auto industry imports 0.5mt coils either CR or hot rolled (HR) to be cold rolled here.

Deep drawing (DD) and extra deep drawing (EDD) qualities of steel, required for the auto industry, are also not produced in the country. Domestic steelmakers also do not produce CR coils with highly polished surface. Tisco's CRM will produce such qualities, the Tisco official said.

At present, the country's installed cold rolling capacities are under-utilised mainly due to lack of demand caused by a near-recession situation in the white-goods sector.Out of India's total cold rolling capacity of 5.9mt, secondary sector has a capacity of 3.8mt, while the remaining 2.1mt is with main producers, including Bokaro and Rourkela steel plants of the Steel Authority of India Ltd. And the secondary and main producers taken together have produced only 3.3mt in the 1997-98 fiscal of which only 0.1mt was exported.