Steel Authority of India Ltd (SAIL) has decided to cut production in the first quarter of the next financial year in a bid to offset domestic market pressures and escalations in input costs which have hit performance during the current fiscal.
The objective of lowering production in the first quarter is to facilitate the speedy disposal of stocks which have piled up due to a stagnant domestic market. This, in turn, would enable the steel major to achieve higher sales in the first half of the next fiscal as compared to the corresponding period last year.
Addressing a press conference here yesterday, Arvind Pande, chairman, SAIL, said, The strategy for the next fiscal is to push most of the growth to the second half and concentrate on capital repairs and managing working capital in the first half.
However Pande emphasised that despite the plan to cut production in the first quarter, SAILs overall production plan for the next financial year would actually see an 8 per cent growth in production. The cutback in the first quarter is only to facilitate the liquidation of inventories, he explained.
During the next fiscal, SAIL envisages a 22 per cent growth in sales and a 43 per cent growth in exports. On the export front, the company plans to sell about 1.5 million tonne of steel and pig iron in overseas markets.
SAILs new revitalisation strategy is governed largely by the current political situation in the country. What the industry needs now is a stable government which would boost investor confidence and provide the much needed kick start to the economy. Major growth would pick up only in the second half of the fiscal with the ushering in of a new government after elections, Pande said.
On the performance of the company in the current fiscal, Pande said, In a difficult year, we were able to tale some initiatives and corrective action which has resulted in certain achievements. SAIL achieved a 3 per cent increase in domestic sales despite a stagnant market.
Pande was also announced that the company would be able to achieve its target of saving Rs 800 crore through cost cutting measures despite having to cope with a Rs 700 crore increase in input costs during the current fiscal, in addition to Rs 1000 crore already incurred as input cost burden last year.
He was also confident of the company showing a net profit at the end of the fiscal.
...to introduce VRS
SAIL will introduce a new voluntary retirement scheme (VRS) with effect from March 1, chairman, Arvind Pande, said. The scheme would be on the lines of a deferred income scheme whereby employees who opt for the VRS would be paid a per centage of their last drawn salary for every month till the date of superannuation.
Pande said the reaction of the unions to the new scheme has been largely neutral but not hostile as the scheme is totally voluntary in nature. We did not expect any opposition since they are only against is compulsory retirement. Pande said.
