Lloyds Unveils Cost-Cutting Plan

Rs 100-crore annual savings expected for the group

The group has reduced its total number of establishments by seven, closing its offices at Wadala, Nariman Point in Mumbai, two offices in Delhi, two offices in Bangalore and one in Pune

The Lloyds group is launching a cost-cutting exercise that is expected to save Rs 100 crore annually.

The steel and engineering group went through a difficult 1996-97, thanks to a demanding steel market combined with high operational costs.

The cost-cutting measures include switching over to a better charge mix and taking steps to reduce power consumption. This is expected to bring down cost of production from Rs 13,000 per tonne to Rs 11,000 per tonne, company sources said.

Use of better charge mix besides a Rs 200 per tonne drop in DRI prices in the last half has resulted in a saving of Rs 200 per tonne of HR coils produced.

Transportation costs at Lloyds Metals sponge iron plant have been reduced by decreasing the turnaround time for loading and unloading operations, company officials said. At the administration and HRD level, the group has centralised purchases and decided to merge the branch offices of Lloyds Metals and Lloyds Steel for greater operational convenience and lower operational expenses.

Also, Lloyds Steel has carried out cost-reduction measures in the operations of contractors working for the company, resulting in a decline in manpower of over 450 of contractor employees in the plants at Wardha, Ghughus and Murbad. The company has not made any new recruitments in the last six months, which has resulted in a five per cent drop in administrative staff.

Auxiliary functions such as finance exports and secretarial departments for Lloyds Metals and Lloyds Steel have also been merged. And the marketing and corporate functions of the two companies too are expected to be merged in the future.

Moreover, the group has reduced its total number of establishments by seven, closing its offices at Wadala, Nariman Point in Mumbai, two offices in Delhi, two offices in Bangalore and one in Pune.

Besides, the new differential night tariffs rule introduced by MSEB recently is expected to save Rs 22 crore per annum from the group's power bill. The group has also embarked on a benchmarking exercise which has increased the operational efficiency at the pipe plant at Murbad by 30 per cent.

The group expects a significant rise in production levels on account of process improvements, and Lloyds Steel is expected to produce 5 lakh tonnes of HR, 1.10 lakh tonne of galvanised material and 0.7 lakh tonne of pipes in 1996-97, up from 4.04 lakh tonnes of HR, 0.79 lakh tonne of galvanised material and 0.57 lakh tonne of pipes produced by the company last year.