The anonymity of the company is particularly surprising because SJK steel has a power-packed board headed by former SBI chairman D.N. Ghosh, including a former member of the Central Board of Direct Taxes (N.R. Sivaswamy), a former managing director of MECON and nominees of the IDBI, UTI and LIC. It is promoted by Y. Jithin Kumar and Y. Janardhan Rao to set up a project at Anantapur in Andhra Pradesh with technical collaboration from Shougang Corporation of China.

In 1995, SJK Steel was conceived as a simple Rs 405-crore project to manufacture 2.63 lakh TPA of billets and one lakh TPA of rolled products. The IDBI appraisal says, that during implementation, in fact within a year, the project's ``scope'' was changed to convert itinto a manufacturer of high carbon and alloy rolled bars and wire rods with a higher capacity of four lakh TPA. The project cost immediately rose to Rs 636 crore.

Having ambitiously changed the scope, the promoters found it difficult to raise funds. They had proposed a public issue of Rs 127 crore which failed to come about because the primary market collapsed.

Originally, the project had institutional co-promoters such as MSTC (Rs 15 crore), Shougang, the technical collaborator (Rs 14 crore), MECON, Asian Finance and Investment Corporation Ltd. of Manila and some Non-Resident Indians and overseas bodies.

When the promoters were unable to raise funds and the delays increased, all these co-promoters backed out. The cancellation led to a fund gap of Rs 266.8 crore, while the delays led to a cost overrun of another Rs 180 crore. The total need for additional funds thus mounted to Rs 446 crore -- higher than the initial project cost. Now, the promoters plan to bring in fresh funds worth Rs 86 crore whileinstitutional lenders will fund the rest.The problems with the project were not merely financial. Some seemingly basic project details were added on and ``envisaged'' only after implementation began, such as the diversion of a nullah and the building of a water reservoir. Delay also occurred because detailed project plans and engineering designs were not given by the project collaborators in time. Its tiny, 17.5 MW captive power plant, also failed to materialise because REPL Engineering which was to build it on a BOOT basis, ``had its own problems''.The plant has now been made into a subsidiary with SJK Steel investing Rs 20 crore and the capacity being increased to 28.2 MW. The plant will get separate funds worth Rs 88 crore by the institutions, which now realise that cheap power through a captive plant using flue gases from the blast furnace is important for project viability.

Similarly, a lime plant (100 tonne per day) and ladle-refining furnace were also proposed after the original project wasconceived. Details of project implementation indicate the plant is unlikely to be commissioned by the May 1999 deadline. However, IDBI is satisfied at the implementation made with the existing funds. Another positive feature is that its cost of steel is slightly lower than Bellary Steel and considerably lower than Jindal Vijayanagar which are to tap the same mines for ore.

The expert committee has recommended that the project be split into two phases with the first phase covering manufacture of pig iron through the blast furnace route and the conversion of pig iron into steel and billets. It has also asked for the viability of phase one, excluding the rolling mill to be tested.

No decision has been taken on the second phase, involving rolling of billets into wire rods. The committee has also expressed doubts about the company's ability to tie up funds from commercial banks as it envisaged. This seems to imply that the institutional funding of Rs 200 crore has met with the expert committee's approval, butit does not specifically say so.