Public sector steel giant Steel Authority of India Ltd (SAIL) has set itself a target of Rs 1,500 crore, which it proposes to save in its cost cutting drive during 1998-99.
This was finalised at a high-level meeting of the company's top brass headed by chairman, Arvind Pande, at Ranchi earlier this month. An important feature of the cost cutting initiative this year is a 30 per cent slash in budgets across the board.
The meeting in Ranchi has become an annual feature on the SAIL calendar since the last financial year, when it initiated its first cost cutting drive to save Rs 800 crore. The company achieved a saving of Rs 700 crore last year. A SAIL spokesperson said, "The company would also benefit this year from the two-year retirement extension for public sector employees.Since the date for payment of retirement dues has been deferred by two years,it would be able to save considerably on this front." While operational efficiencies were the focus of cost cutting last year, improvements in manpower productivity would constitute a crucial part of the drive this year.
Last year, the steel major achieved a manpower productivity of 96 tonne per man as compared to 94 tonne per man, logging an improvement of only two per cent.
Apart from these factors, the usual parameters have been adhered to the current year as well. These include improvements in techno-economic parameters and a reduction in coking coal costs, the spokesperson added. Last year, the steel major reduced its coking coal intake by one million tonne and efforts are underway to achieve a similar target this year. In this regard, the company has reached an agreement with Coal India (CIL), which stipulates that price increases by CIL will be limited to five per cent.
SAIL purchases more than half its annual coal requirement of 13 million tonne from CIL. Setting the tone for better performance on the sales front this year, the steel major achieved a 19 per cent growth in the first quarter of the current fiscal. According to company officials, this was primarily on account of the two-pronged marketing initiative adopted by the company last year -- direct despatches and stockyard sales.
Direct despatches of products from the plant saw a growth of 36 per cent in the first quarter, while stockyard sales posted a growth of 4 per cent during the period.
The combination of direct despatches with stockyard sales has resulted in the improvement in the quality of service to customers.
"Direct despatches have two distinct advantages. First, it saves considerable time for the customer and second, a consignment on direct despatch enjoys a price advantage over stockyard prices.
There is also the factor that direct despatches can overcome the shortcomings of stockyards in terms of accessibility." said officials.
Spurred by its favourable first quarter performance, the steel major has set a higher sales target for the second quarter beginning July 1998, despite this quarter traditionally being a lean period for the industry.
