Central public sector undertaking Steel Authority of India has decided to adopt a multi-pronged strategy to save Rs 5,000 crore over the next three years.

The cost-cutting strategy will involve input optimisation, improving operational efficiency, quick stabilisation of newly-commissioned units, reduction of overhead costs and enhancing employee productivity. “For each of the areas, integrated steel plants and units have identified potential cost drivers and elaborated their strategy for cost optimisation,” the PSU said in a statement after a ‘Strategic Confluence on Cost Control and Cost Competitiveness’ at its Management Training Institute in Ranchi.

The meeting was chaired by SAIL Chairman, C.S. Verma. “Although there has been some relief on the price of purchased inputs, these have been more than offset by the falling price of finished products, and also due to the falling rupee, which impacted imported inputs such as coking coal,” said Verma, adding that this prompted the company to adopt a new cost-cutting strategy.

During the two-day deliberations, Verma urged the participants to think ‘out of the box’ to enhance the company’s competitiveness in the face of prevailing market conditions and intense competition.

SAIL’s expenditure stood at Rs 42,541 crore in 2011-12, almost similar to the 2012-13 fiscal. On the other side, gross sales fell to Rs 49,987 crore in 2012-13, against Rs 51,036 crore in 2011-12.

Mainly due to subdued consumption, domestic steel makers are battling rising production costs and lower sales realisation.

shishir.s@thehindu.co.in

Related Topics