New Strategy May Help Asp Make Operating Profits

The plant has set an ambitious target of cost reduction to the tune of Rs 35 crore in the current fiscal. According to SAIL sources, this will help the plant earn cash profits in the next fiscal. ASP had posted losses amounting to Rs 200 crore in the last fiscal.

The strategies include: shedding manpower, reducing production costs, administering strict control over expenditure, adjusting suitably to the new and totally changed outside scenario along with reduction in inventory.

The manpower has already been brought down from a level of over 7,300 in the early nineties to less than 3,870 through two voluntary retirement schemes (VRS). Reduction in workforce has been around 15-20 per cent each time and hence it is expected that the coming VRS will also see a 15-20 per cent cut down in manpower.

 

ASP has been successful in reducing inventories from a level of over 72,000 tonne in April 1998, to the present level of 16,000 tonne. The plant produces only on orders and carries inventories for about a month and a half.

Further, synergising operations with Durgapur Steel Plant (DSP), ASP has been able to cut down costs significantly. ASP gets around 1,500 tonne of hot metal every month from DSP who also provide about 4,000 tonne of scrap monthly to ASP besides supplying oxygen, coke oven gas, power and water. ASP also uses DSP's railway sliding for despatch of its products.

In the eastern region, ASP and Tata Steel are the two main producers. ASP's bottomline has been largely affected by the downtrend in the special steels market. While the domestic steel making capacity increased to 4.5 million tonne, consumption remained in the vicinity of 1.5 million tonne.

To buck the trend, ASP which had an installed capacity to produce 2,68,000 tonne of liquid steel closed down one 10-tonne and one 50-tonne furnaces. The plant now, runs only on two furnaces which have an effective annual capacity of about 1,70,000 tonne of special steel and will be ending this fiscal with about 1,30,000 tonne production. Indian Railways is the single largest customer for ASP with an annual offtake of 30,000 tonne .