(Repeats Thursday's story, no changes to text)
* Expert panel met on Tuesday to draw up plan within two
* Boston Consultancy Group to advise SAIL on revival
* Steel ministry aims to make SAIL profitable in 2017/18
* SAIL may show improvement by end of decade - analyst
By Neha Dasgupta
NEW DELHI, March 30 India has set up an expert
panel to help revive its loss-making state steel maker after a
government review found the company to be far less efficient
than its rivals despite spending more than $10 billion in the
past eight years.
A review document, containing previously undisclosed data
and seen by Reuters, criticises Steel Authority of India (SAIL)
for everything from the use of low-quality raw
materials to outdated technology, suggesting that its problems
were not simply the result of cheap Chinese steel imports.
SAIL, which has been overtaken by JSW Steel as
India's biggest producer, has posted seven straight quarterly
losses, and Reuters reported last week that it was at risk of
losing business from its biggest client.
SAIL's underperformance could derail the government's target
to triple steel production in the country by 2030, and shows how
Prime Minister Narendra Modi's big infrastructure dreams may
have to rely heavily on the private sector and imports.
Steel Minister Chaudhary Birender Singh, worried by what he
called SAIL's "unsatisfactory" output performance, has asked the
panel to recommend a timeline for ramping up capacity at a
"quick pace", to find ways to lower production costs and to
improve branding and marketing.
"The terms of the reference of the committee will include
chalking out a revival plan for turning around loss-making
(companies) of the Ministry of Steel to profit-making companies
in 2017/18," Singh's office told the committee this week, in a
memo seen by Reuters.
The panel, comprising top officials of various government
ministries and SAIL, met for the first time this week and will
be helped by Boston Consulting Group (BCG) in coming up with a
revival plan for the company.
They will set quarterly, six-monthly and yearly targets for
SAIL, according to the memo. Two government sources said
minister Singh wants a plan for SAIL and smaller state steel
company RINL in 15 days.
A SAIL spokesman did not respond to requests for comment. A
steel ministry spokesman declined comment.
Government officials earlier said SAIL had failed to take
advantage of protectionist measures that have helped private
companies out-price Chinese steel and lift their margins.
FAILING TO SAIL
SAIL fares poorly when compared to international efficiency
standards and those of private Indian companies such as JSW and
Tata Steel in blast furnace productivity, raw material
consumption and energy usage, according to the review document.
For example, SAIL's average daily blast furnace productivity
of 1.58 tonnes per cubic meter last fiscal year ended March was
40 percent lower than that of JSW. SAIL said the metric improved
7 percent between April and December last year.
Its use of coke - derived from high-quality coal, and thus
costly - was also higher than private peers and global
standards. April-December coke use came down 3 percent from a
year ago, SAIL said.
Its use of pulverized coal injection technology - a cheaper
substitute to coke - was the lowest compared to JSW and Tata in
2015/16. During April-December, SAIL said the gauge improved 14
The government said this week that three of SAIL's ailing
units put up for strategic stake sales have made losses for the
past five years despite the company pumping in more than $400
million for their modernisation. (bit.ly/2mPA9PB)
The steel ministry told parliament on Wednesday that most
SAIL plants were set up almost half a century ago and that the
technologies and equipment had become "old and obsolete".
SAIL is chasing tie-ups with foreign majors such as
ArcelorMittal and POSCO, companies known
for their cutting-edge technology.
Analysts say higher employee costs, typical of government
companies in India, were another factor holding SAIL back.
"Even when the market was good, SAIL was under-performing
because of higher fixed costs," said Goutam Chakraborty, analyst
at Emkay Global Financial Services in Mumbai, who expects SAIL
to show improvement by end of this decade.
(Reporting by Neha Dasgupta; Editing by Krishna N. Das)