For a couple of months now, Alloy Steels Plant executive director BK Varma has been reporting to the Durgapur Steel Plant managing director SB Singh. The Alloy Steels Plant chief had independent charge over the company till then.

Sources in SAIL said Durgapur Steel Plant had also begun supplying hot metal for the ASP electric arc furnaces. The operational merger, precludes possibilities of the loss-making unit being shut down, as had been recommended by the management consultants McKinsey.

Subsequently, a business reorganisation scheme drawn up by SAIL proposed shutting down loss-making units. The Steel Authority of India Ltd began toying with the idea of closing down the Alloys Steel Plant and started scouting for a joint venture partner for the Salem SteelPlant (SSP).

The producer of premium quality stainless steel received interested inquiries from companies like Avesta Sheffield, Nipon Steel, Gamma Synergies of Canada and Jindal Strips.

Last month SAIL floated an open tender for a strategic partner to start a stainless steel melting facility near its Salem Steel Plant (SSP). The facility will provide the Salem Steel Plant with stainless steel slabs, which it now has to import and make the unit more cost-effective.

The merger with Durgapur Steel Plant will similarly make the Alloy Steel Plant commercially viable. The Alloys Steels Plant and the Salem Steel Plant do not quite figure in the overall business reorganisation of SAIL, which is now awaiting a nod from the Union Cabinet.

The two companies were in category of `idle assets' that SAIL planned to dispose of. Company statements had, however, emphasised all along that the Alloy Steels Plant would only be closed down as a last resort.

Sometime in August, shortly after the more than Rs 13,000crore-turnover steel giant's brainstorming session at the Sariska hill resort, SAIL set up a committee headed by the director of its Research and Development Centre for Iron and Steel (RDCIS) SK Bhattacharyya. Bhattacharyya will study the possibility of producing ferro alloys at the Alloys Steels Plant.

The committee is yet to submit its report. Producing ferro alloys at the Alloy Steels Plant would give SAIL greater control over the market for the vital steel-making input.

Unlike Tata Steel, which has invested steadily in facilities for producing ferro alloys, SAIL's sole source of the steel-making catalysts is its subsidiary, the Maharashtra Elektrosmelt Limited (MEL). The Maharashtra Electrosmelt plant at Chandrapur supplies ferro-manganese and silico-manganese to SAIL plants.