Sail To Close Sick Units, Cut Workforce

Steel Authority of India Ltd (SAIL), the countrys largest steel producer, has emb-arked on a strategy combining workforce reduction and closure of unviable units to stem a recent decline in profitability, a company official said.

We are starting a voluntary retirement scheme, effective from March 1, Shoeb Ahmed, chief of corporate affairs said.

At present we have 180,000 people. The VRS scheme, over a period of time, could bring this down by 60,000 people at least, he said.

Ahmed said the scheme envisaged making payments every month to employees opting for the scheme and not bulk payments. Around 18 per cent of our total cost is on salaries and wages.

We expect to bring this (proportion) down substantially when this (scheme) takes off, he said.

However, the reduction in numbers will still not be adequate, Ahmed added. We have got 180,000 people to produce (only) 10 million tonnes, which is ridiculous. Ahmed said the scheme would be totally voluntary and would not be forced on employees.

SAILs net profit plunged to Rs 48.53 crore for the six months ended September 30, 1997, compared to Rs 361 crore in the year-ago period.

The SAIL official said unviable units would be closed down and the employees in these units would be redeployed. Facilities which are either not properly utilised or are not necessary, we are going to close those down, he said.

He said these may include the steel ingot facilities at the Rourkela plant and the bar and rod mill at its alloy plant at Durgapur. There will be no retrenchment in any plant, in any unit inSAIL, he said.

Ahmed said SAIL was on course to meet its cost reduction targets and raise output to 11 million tonnes at the end of 1997-98. We had an Rs 800 crore target for cost reduction. We are going to achieve that.

He said the government had now accepted Indian steel producers position that dumping of hot-rolled steel coils by some producers in the Commonwealth of Independent States (CIS) nations hurt them.

All investigations are over and the injury to local producers has been proved beyond any reasonable doubt. The commerce ministry has accepted our claim and we are hopeful a decision will be made soon, he said.