SAIL plans to emerge out of red by selling seven ventures

SAIL plans to emerge out of red by selling seven ventures
PRESS TRUST OF INDIA

NEW DELHI, MAR 3: The Steel Authority of India Ltd (SAIL) will sell off seven of its ventures to retire some of its over Rs 12,000 crore debt as part of its business strategy to emerge out of the red, chairman and managing director Arvind Pande has said.

The corporation, which posted Rs 2,000 crore losses during April-December 1999, has prepared a blueprint for the sell-off and set up a high powered board sub-committee to restructure the remaining business activities comprising four steel plants, Pande told newspersons yesterday night at an informal get-together.

Asked if the over Rs 8,000 crore revival package stipulated condition that proceeds from selling off of the SAIL's business activities be returned to the Government, Pande replied in the negative. He said, ``No. The proceeds from selling seven business activities including power and oxygen plants will not go to the Government. We will use these for retiring our debts''.

He declined to give estimates of the value of activities slated for the sell-off saying it was too early to project the proceeds.

Pande said SAIL did not get any cash support from the Government in the revival package which comprised only book adjustment of Rs 5,000 crore through waiver of loans and guarantee to raise over Rs 3,000 crore for which SAIL would have to pay `interest and guarantee fee'.

Pande disagreed that the package could be construed as `subsidy' and in no way would affect SAIL's exports that have recently come under cloud with Europe and US imposing anti-dumping duty.

PRICE HIKE:

SAIL indicated that it would increase prices of steel products next month to achieve the targeted Rs 18,000 crore turnover during 2000-01.

"We have set a target of Rs 18,000 crore turnover during next financial year and we are planning to achieve it through a mix of price-rise and improving our product-mix as per the market requirement," Pande said.

"We have orders for all our plants for the whole of March and the prices are also looking up," he said, adding that the corporations would break-even in two years on the strength of financial and business restructuring.

SAIL, which has been given a financial package of over Rs 8,000 crore by the government last month, was likely to attain a turnover of Rs 16,000 crore in 1999-2000.

SAIL, which suffered Rs 2000 crore losses in April-December 1999, has chalked out a detailed plan to overcome the setbacks it faced during the last couple of years to ensure the long-term competetiveness of the company, Pande said.

SAIL would sign a Memorandum of Understanding (MoU) withthe Steel Ministry in a few days outlining goals with a time frame for restructuring to turn the corner.

Brushing aside criticism about success of SAIL packagePande said, "We will not go to government for further support. We are concious of challenges before us and we are confident of coming out of the red within two years." Steel industry was showing signs of revival since thelast year and market was demanding more than producers could supply, Pande said, adding that SAIL's mills were fully booked for the next couple of months.

This year, SAIL was likely to reduce the inventories byover seven lakh tonnes due to increase in demand. Union Budget for 2000-01 was just another step to boost the steel industry, he added.

Another area of concern was rationalisation of manpowerof over 1.6 lakh in SAIL. The company is planning to achieve the target of downsizing the manpower by 60,000 over a period of three to four years through a mix of voluntary retirements (VRs) and natural retirement.

SAIL is also likely to raise Rs. 1,500 crore forimplementing the VR scheme more effectively, for which government has already given guarantee, Pande said, adding that it was expected to cost around Rs. five lakh per employee opting for voluntary retirement.

Asked whether SAIL was considering lowering theretirement age from 60 years to 58 years, Pande said there was neither a proposal nor it was desired.