CAG pulls up steel maker SAIL for over-consumption of imported coal

Steel maker SAIL consumed imported coal more than the permitted levels between 2016 and 2023, resulting in additional expenditure to the extent of Rs 2,539.68 crore, a CAG report has said.

CAG also flagged that Steel Authority of India Ltd (SAIL) had not fixed any benchmark for inventory carrying cost per tonne of raw material, semi-finished material and finished goods.

This happened despite the fact that on an average, SAIL had an inventory of Rs 21,698 crore during 2016-17 to 2022-23, constituting about 67 per cent of its current assets, the CAG report said.

As per the report titled 'Inventory Management in SAIL', the company's "steel plants consumed imported coal more than the norms fixed by the management".

"Higher consumption of imported coal which was costlier than the indigenous coal resulted in potential additional expenditure to the extent of Rs 2,539.68 crore during 2016-2023," the Comptroller and Auditor General (CAG) report said.

The report of the CAG of India on Performance Audit on 'Inventory Management in SAIL' (Audit Report No. 10 of 2025) was presented in Parliament on Tuesday.

SAIL failed to maintain stock levels of raw materials like iron ore, coke, sinter due to which blast furnace was put under off-blast state resulting in inability to produce hot metal of 9.32 lakh tonnes and to earn potential revenue of Rs 1,231.52 crore at Rourkela, Bokaro, and Durgapur Steel Plants, as per the report.

SAIL could not maintain the norms for non-moving inventory, it said, adding that total non-moving inventory of stores and spares at SAIL plants increased from Rs 137.40 crore in 2016-17 to Rs 212.57 crore in 2022-23, registering an increase of Rs 75.17 crore (55 per cent).

Excess procurement of inventory without considering the requirement resulted in blocking-up of capital in non-moving items.

SAIL plants took more days than the stipulated time of six months (186 days) between raising of indent by the department concerned and placement of purchase order in 9.71 per cent cases during 2016-2023.

Five integrated steel plants of SAIL could produce 106.15 million tonnes (89 per cent) of the production target of 119.66 million tonne of saleable steel envisaged in the annual business plan for 2016-2023.

The capacity utilisation by these steel plants was between 77 per cent (2020-21) and 89 per cent (2022-23).

As against total production of 106.15 million tonne of saleable steel and orders booked by central marketing organisation for 121.86 million tonne, despatches from plants were only 93.75 million tonne, i.e. 77 per cent of orders booked, the report said.

Lower despatch of materials than the requirement of customers led to delay in liquidation of stock and increase in inventory carrying cost on the stock lying at steel plants, it added.