Sail Draws Up Plans To Save Rs 80cr This Fiscal

Public sector steel giant Steel Authority of India Ltd (SAIL) plans to save Rs 80 crore during the current financial year through a `standardisation' drive which it has embarked on as part of its cost-cutting initiative this year. According to a release, the heterogeneity of machinery and equipment at SAIL's plants in Bhilai, Bokaro, Durgapur and Rourkela _ built with Soviet, British and German technological collaborations _ has resulted in the usage of diverse materials, higher cost per unit and longer lead time of procurement. Standardisation will negate these effects to a large extent and in turn save costs.

The company, which suffered a loss of Rs 311 crore in the first quarter of the current financial year, has a higher cost per unit and requires longer time to procure machinery and equipment at its plants at Bhilai, Rourkela, Durgapur and Bokaro due to divergent machinery specifications. Standardisation would reduce these effects to a large extent and save cost, SAIL sources here said.

One of the most tangible benefits accruing from standardisation is variety reduction which would result in inventory reduction. This would in turn help to reduce capital investments in inventory and storage, the release said.

The sources said that material like wire ropes for cranes were bulk purchase items and were required by all shopfloors in every steel plant. Now, a limited number of sizes were selected instead of different sizes and types. Apart from purchase of material and equipment, standardisation was also extended to design, operation, maintenance, materials management, packaging and safety. Standardisation of lubricants such as oil film bearing oil, etc, has helped in an average annual saving of Rs 2.56 crore for Bokaro steel plant and Rs 86.6 lakh for Durgapur steel plant.

Collection of information on the financial benefits of all the 250 odd subjects for which standards exist would conservatively add up to a minimum figure of Rs 80 crore, the release added. Standards are also being set in the area of packaging of products such as sheets, plates, coils and merchant mill products. Attempts are being made to ensure that products reach the customer in absolutely damage-free condition.

For SAIL, the present yearly cost of maintenance is to the tune of Rs 2,900 crore. Even a modest one per cent saving through streamlining practices as per the existing standard would result in saving about Rs 29 crore for the company, said the release. The company is working towards maximising savings on this front by formulating standards in the area of maintenance.

Standardisation of lubricants like film bearing oil, anti-wear hydraulic oil and multipurpose grease alone, the sources said, helped in average annual saving of Rs 2.65 crore for Bokaro steel plant and Rs 86.6 lakh for Durgapur steel plant. In addition to lubricants, efforts to standardise other items like electric motors, sinter plant pallets and carbon brushes for motors had yielded a benefit to the tune of Rs 5.8 crore. The sources said that the present annual cost of maintenance of SAIL plants was Rs 2,900 crore and a modest one per cent saving by streamlining the process would help the company to save Rs 29 crore.