Sail To Cut Coal Purchases By 2 M Tonnes
Steel Authority of India Ltd (SAIL) has decided to reduce coal purchases by 2 million tonnes in 1997-98, as part of an overall Rs 1,000 crore cost-cutting exercise in the wake of the companys poor financial performance last year. The coal budget for the current year had earlier been fixed at Rs 3,800 crore. We have now decided to bring it down by Rs 800 crore. To achieve this we will cut back coal purchases by 2 million tonnes, SAIL chairman Arvind Pande told Business Standard.
SAIL has also slashed the amount it had planned to spend on modernisation of its plants in the current year from Rs 2,700 crore to Rs 2,000 crore.
Pande explained that this was part of an overall strategy aimed at bringing down the consumption of raw material. The raw material on which we expect the most reduction is coal, he said.
This year we will aim to produce the same amount of hot metal by consuming less coal. Thus for the same level of production of hot metal, we are planning to use 2 million tonnes less coal than last year, Pande said. Out of the reduction of 2 million tonnes, around half a million tonnes will be on exports.
Similarly, the steel major is also planning to bring down the consumption of other raw materials like limestone, dolomite, refractories, ferro alloys and to improve the captive power generation, which is cheaper than purchase of power from the grid.
We had detailed discussions with all our plants and all our managing directors across the company and this Rs 1,000 crore figure has come out after lot of discussions and detailed analysis. There is fair level of confidence that this is something we can achieve, Pande said.
As of today, the predictions for the year are not much better than last year. But if in the second half of the year demand picks up, as is being predicted, we should be able to do better, he added.
The countrys largest steel-maker is preparing itself for a difficult year. Pande said, We have decided to take some internal actions which will keep our profit figures reasonable. Apart from reducing raw material consumption, the company is also looking at various ways of improving sales realisation. If we focus on cost, improvement in sales realisation and quality improvement, we should be able to do marginally better than last year, the SAIL chairman said. in terms of overall profits.
Quality-based deal with CIL
Rakhi Majumdar oal India
SAIL will enter into a legally enforceable contract with Coal India in which, for the first time, the supply of coal will be linked to its quality.
We are in the process of putting final touches to the agreement and we expect to sign it soon, SAIL chairman Arvind Pande said.
The agreement will be on the principle of penalty and bonus based on the ash content of the coal supplied.
If CIL supplies coal in which the ash content is below a level fixed in the contract, it will get a bonus. For supplying coal with a higher ash content, the coal company will be penalised.