Sail Aims At Paring Costs By 10 Per Cent

The public sector giant Steel Authority of India Ltd (SAIL) has set an ambitious plan to cut costs by about 10 per cent to spruce up its financial performance in the current year.

The cost reduction effort by the steel major comes in the wake of rather difficult 1996-97, in which its profits are expected to be lower than last year's figures due to increase in input costs and sluggish market, industry sources said.

SAIL has taken a knocking of Rs 1,000 crore in 1996-97, thanks to hike in coal prices and rail freight tariffs. Besides, the public sector giant was forced to forego its normal bi-annual price hike in January as the markets were extremely sluggish.

 

The current financial year is also expected to remain difficult for most of the steel companies. Sources said according to the annual production and financial budget estimates, SAIL has put targets ranging from 5 per cent to 15 per cent for cost reduction.

SAIL chairman Arvind Pande has said recently, "we are in the midst of hectic competition and we should not forget that it is the customer who determines our future, in satisfying him, we make money.

According to sources, the company should make efforts to divert part of its production for exporting.

SAIL has decided to export 15 per cent of their production annually. However, globalisation calls for a planned and sustained export strategy.

The new export strategy would help steel major exhaust its inventories which have been piled up over period due to depressed domestic market, the sources said.

It has also plans to reduce the inventory of raw materials, in-process and finished materials and stores and spares. Last fiscal had witnessed huge inventory pile ups in most of the steel manufacturers including sail due to downtrend in demand.

The steel industry had grown at 4.5 per cent last year compared with 10 per cent previous year due to sluggish market and general economic slowdown.