CAG flags dealership lapses for SAIL's falling market share

India's largest steel producer, SAIL, today came in the cross-hairs of government auditor CAG for its declining market share.
Steel consumption in India rose 30 per cent in 2009-15, but state-run SAIL's market share in total saleable finished steel fell to 14.2 per cent from 18.5 per cent during the same period, it said in its report.
"This was not only due to the delays in capacity addition projects, but also due to absence of an active dealership base, which adversely impacted the growth in retail sales," the report of the Comptroller and Auditor General (CAG) revealed.
It added that 39-54 per cent of the authorised retail dealers (ARDs) of the Maharatna firm are "inactive".

"There was no physical verification of ARDs' activities by branch offices. Sales through MoUs with large institutional consumers accounted for 92 per cent of the company's total sales in 2014-15 and developing customer base in retail sector was accorded lower priority," the CAG report said.
SAIL was not "successful" in about 30 per cent of the tenders during the 3-year period from 2012 to 2015, mostly due to "higher bids", it added.

"The company did not analyse the reasons for losing the business in tenders and took no steps to formulate a future course of action," the auditor added.
"Extension of credit period to Tirupati Group resulted in undue benefits of Rs 3.98 crore. Interest of Rs 18.81 crore was not recovered from Larsen & Toubro Ltd."

Inadequate supervision over conversion agencies resulted in "instances of misuse" of the company's supplies and SAIL brand name by conversion agents (CA) and wet leasing agents (WLAs). The firm could not recover Rs 8.52 crore from a WLA in Visakhapatnam, it was found out.
The CAG recommended that SAIL should "expand its customer base in the retail sector and strengthen periodical supervision of activities of ARDs".
It also suggested an analysis of the causes of failure in securing orders through tenders and outcome of such activities may be used while formulating future action plans.
Besides, the CAG called for improving the performance of the CAs and the WLAs.