Sail Arm Elektrosmelt Declared Sick Venture

The state-owned Steel Authority of India Ltd (SAIL) has declared its subsidiary, Maharashtra Elektrosmelt Ltd, a sick company in terms of the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985.

However, SAIL is understood to be working out a revival plan for the subsidiary. The major factors contributing to Maharashtra Elektrosmelt's financial performance were input escalation and severely sluggish market condition.

The company produces different grades of ferro alloys such as high carbon ferro manganese, silico manganese and medium carbon ferro manganese.

Owing to increase in power tariff, raw material cost and liberalisation in import, apart from the market condition, this SAIL subsidiary incurred a loss of Rs 17.84 crore on a turnover of Rs 186.97 crore (including conversion income of Rs 76.94 crore). Loan funds stand at Rs 21.27 crore. The company had posted losses of Rs 16.10 crore on a turnover of Rs 196.15 crore in the previous year.

 

However, in view of sluggish market conditions, measures were taken by the company to find markets outside SAIL.

During the year, the company resorted to conversion arrangement with SAIL steel plants to maximise revenue generation. Maharashtra Elektrosteel also exported silico manganese of 1925 MT and earned a foreign exchange earning of Rs 3.48 crore.

To achieve objectives of the corporate plan 2005, studies were carried out for installation of ferro alloy casting machine for ferro alloy in marketable size to achieve better yield. Installation of 30 MW power plant on build, own and operate basis is under consideration. A 4.2 mw gas-based power plant has also been installed recently.

The company's manpower strength as on March 31, 2001 was 949 comprising 145 executives and 804 non-executives.

SAIL's other subsidiary, Indian Iron and Steel Co Ltd (Iisco) was declared sick by the BIFR on August 17,1994, and presently SAIL, with its operating agency is working on a revival plan for Iisco. SAIL and IDBI have been given two months' time within which to submit a tied proposal. BIFR has demanded an explanation from the government and SAIL as to why Iisco should not be wound up. The company employs around 24,000 workers and wages account for almost 37 per cent of its sales turnover.