Steel Authority of India Ltd (SAIL) is planning to increase steel prices from April this year to keep in line with international price trends. The public sector steel major, which was forced to forego its customary price revision in January because of poor demand, is hopeful that an upswing in global prices will help domestic prices regain lost ground.
Addressing reporters in Mumbai yesterday, SAIL chairman Arvind Pande said, Global prices have been going up. Either this would lead to more exports or a hike in domestic prices. We are hoping to increase prices from April onwards.
SAIL has also decided to end the discount war in the industry to slash its inventory level.
SAIL is planning a separate company to develop the Tasra and Chasnala coal fields. SAIL will hold 26 per cent equity stake in the new company and may take on a foreign partner, Pande indicated.
The two coal blocks will be developed for captive consumption of the steel major.
SAIL will be entering into long-term legally enforceable agreements with Coal India Ltd for its present coal requirements. SAILs coal consumption is expected to touch 7 million tonnes next year from 6 million tonnes presently.
Attributing the slow down in the steel sector to sluggish demand and a general economic slowdown, Pande said the steel industry had grown 4.5 per cent compared to 10 per cent last year.
For the first time in its history, the steel major may report a declining performance with profits lower than Rs 1,000 crore in 1996-97, Pande added.
SAIL has undertaken several cost-cutting exercises to face the difficult market conditions. It has closed a coke oven battery in Bokaor due to the increase in coal prices, and will be closing down its blast furnaces in Bhilai and Bokaro ahead of schedule.
However, there will not be any cutback in saleable steel production, Pande clarified.
The economy has to pick up for the market to improve, he said. The situation should improve if one considers the fact that the present steel consumption of 22 million tonnes is expected to rise to 30 million tonnes by 2001, he said.
