SAIL scores low on employee output ratio

Staff strength was 88,000 on April 1, 2016; by March 31, 2017, expected to be 83,000

Efficiency as measured in output per employee at government-owned Steel Authority of India (SAIL) is well behind private sector peers JSW Steel and Tata Steel.

In 2015-16, its crude steel production capacity was 14.279 million tonnes (mt). With 88,655 employees, this meant one employee for every 161 tonnes. JSW had 11,904 employees and produced 12.56 mt; the per-employee output was 1,055 tonnes. At Tata Steel, this metric was 268 tonnes.

Wage cost is 21 per cent of SAIL’s total cost. SAIL has trimmed its workforce by 1,000-1,500 employees annually; it announced a VRS in 2016. Its staff strength would be 83,000 by end-March 2017 and an estimated 79,000 by end-March 2018 — still higher than peers. The steelmaker’s net loss for Q3 narrowed to Rs 795 crore, from one of Rs 1,481.06 crore in the corresponding quarter a year before. Total expenses had risen to Rs 13,332 crore, from Rs 11,759 crore in the comparative period. Year-on-year employee benefit expenses remained flat at Rs 2,343 crore. 

Rating agency Icra said imposition of anti-dumping duty, safeguard duty and MIP had resulted in a 37 per cent fall over a year in steel imports during April-December, after rising by 26 per cent in 2015-16.

LEAN MANUFACTURING 

Trimming Excess Flab

• SAIL announces VRS in May 2016
• Staff strength was 88,000 on April 1, 2016
• Manpower cost in FY17 22% of the total cost
• By March 31, 2017, expected to be 83,000
• By March 31, 2018, likely to reduce further to 79,000