SAIL's 'six-module' revival plan

NEW DELHI, APRIL 19. The loss making Steel Authority of India (SAIL) will cut its costs by Rs. 1,450 crores as part of a six- pronged revival strategy to turn the corner by 2002-03.

As per the revival strategy finalised by SAIL in tandem with the Steel Ministry, the public sector steel giant would work on a `six-module' plan, including operational, organisational restructuring and revamping of marketing strategy.

As per the blue print of the strategy, finalised after SAIL signed a memorandum of understanding with the Government in lieu of Rs. 8,400 crore revival package, the company would reduce operational cost by Rs. 1,000 crores in the next 2-3 years.

Besdies, it would target pruning its purchases by five per cent amounting to Rs. 350 crores and save another Rs. 100 crores through disposal of idle assets, official sources said.

When contacted Steel Secretary, Mr. A. K. Basu, declined to comment on revival strategy but said the implementation of turn around package involving financial and business restructuring was going ahead as per schedule. ``We are also monitoring the progress," he added.

SAIL, which reported a loss of over Rs. 2,000 crores in the first nine months of 1999-2000, has also proposed to restrict the capital expenditure (Capex) between Rs. 1,000 and 1,100 crores annually by way of reprioritisation, sources added.

The Government had approved the Rs. 8,454 crore financial package including waiver of Rs. 5,450 crore loan from the Steel Development Fund (SDF) and the Government in February this year to revive and restructure the loss-making PSE.

The package also included Government guarantee to raise Rs. 1,500 crores with 50 per cent interest subsidy on loan for financing reduction in manpower through voluntary retirement.

The company has proposed to rethink on the marketing strategy and emphasis on steel production for value-added goods. According to sources, it would move towards high-end segments such as white goods sector but at the same time the organisation would continue to serve the low and middle end segments in flat products.

SAIL was also given guarantee to raise Rs. 1,500 crores from the market primarily for the retiring debts and meet other expenditure. Of this, Rs. 500 crores were raised last year, sources said adding that the company would approach the market as and when debt repayment obligations arise.

On business restructuring, it has planned to divest its stake in seven ventures including sick Indian Iron and Steel Company (IISCO), Salem Steel Plant, Alloy Steel Plant and other non-core activities.

Sources said that SAIL was expecting to mop up upto Rs. 8,000 crores through disinvestment of these ventures over a period of four years and the proceeds were likely to be used for retiring debts. As per the schedule sail would reduce its losses substantially in the next financial year and was likely to report profits after two years, sources added.

- PTI

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