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Will it Sail or Sink?

Apr 06, 2002 04:36 PM 5227 views

(Updated Apr 06, 2002 04:36 PM)

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The massive mammoth organisation with Rs.16000 cr sales with a production capacity of 12 million tons, symbolises everything that is right and wrong with Public Sector, as well as the good and bad about Indians, be they workers, managers, Chief executives et all.

Hindustan Steel Limited HSL was the PSU what later became SAIL in late 70’s. In the annals of SAIL, there are many different periods and eras, but most significant division is the pre- Wahdud Khan period and Post- Khan period. Wahdud Khan came in as Chairman in mid 70’s and changed the destiny of this PSU forever. He woke up the sleeping organisation, brought in many a dynamic managers like Dr. N C B Nath as Director(Comml), created the holding company SAIL, shifted the corporate office from Ranchi to New Delhi and converted the PSU into a commercial, business oriented coprporation . The change was phenomenal. The tragedy of SAIL is that subsequent CEOs could not continue the good work and today SAIL is in a pathetic shape. Except for a brief period under V Krishnamurthy, SAIL never regained it’s lost glory.

Bhilai Steel plant with capacity of 3 million tons in M P produces mainly long products, bars&rods, structurals, rails, and semis. Subsequently a wide plate mill was added which could never really make money.This unit was set up with Russian collaboration.

Durgapur Steel plant in West Bengal was set up with British collaboration with 1.6 million tons capacity, mainly produces Bars&Rods, structurals, wheels& axles. This unit has been a chronic sick unit with militant labour unions. Many a times DSP has made a loss of 200 crores while resst of all the plants made a profit of 150 crores! DSP has been one of the main factors for the mess that SAIL is in today. Subsequently an Alloy Steel Plant was also set up at Durgapur with Canadian collaboration. This too never made any money.

Bokaro Steel plant in Bihar was added later ( early 70’s) with 4 million ton capacity with Russian collaboration to produce Flat products like plates, sheets, HR coils etc. Good products, good technology, even today people prefer Bokaro products. But the single mistake of keeping the Galvanizing line in crates for over 4 years and taking further 4 years to commission the line cost a great deal of lost profits to SAIL. While there was an accute

shortage of Galvanised steel sheets, importers were flourishing, there was a huge premium available in market, private sector galvanisers made tons of money, SAIL stood gaping, but could not commission their CGL in time.

Rourkela Steel Plant set up with German collaboration to produce 1.6million tons of Flat products and tubular products, did well and the products were good but not as good as those of Bokaro.

Salem Steel Plant at Salem-Tamilnadu was set up with very high capital cost , but does manage to produce high quality Stainless Steel products, but is not competitive in current scenario.V Subramaniam, the founder CMD still remains an Icon to all steelmen.

IISCO-Burnpur WB, a perennially sick unit was nationalised by Centre under duress and made into a SAIL subsidiary adding further to the woes of SAIL.

VISL-Bhadrawati (Kar) and MEL-Maharastra producing Ferro alloys were added to the SAIL basket further burdening the horse that had already become a mule.

In addition to Steel, SAIL also produces a number of Coal chemicals, Tar products and Fertilisers!

It’s a massive organisation with over 40 branches and dozens of more offices in addition to an R & D centre and Management Training Centre both located at Ranchi.

Sail, though making losses and having become commercially unviable, nevertheless is an institution. SAIL has produced some of the finest talent in managerial and technical fields. Take any Steel plant anywhere in India or abroad, there are some ex- SAIL- men occupying key positions.

The bane of SAIL has been the politics. SAIL has been a favorite playground for politicians of all hues and colors. Politicians decide all the senior level appointments. Ministry of Steel has been a coveted position with enormous clout. SAIL could never get out of the stupor of shortage economy and become a customer friendly company. The tonnage philosophy overshadowed everything else. To give an example: when 6mm wire rods were in demand, SAIL plants will produce 8 & 10mm because they give increased productivity in tonnage terms, 5 &6 mm plates were hot premium items, but RSP will produce 12mm and above.2mm HR coils were hot favorite, but SAIL will produce only 20 % in 2mm and balance all thicker gauges. This taught the private sector to produce what market wanted, they encashed the premium and weaned away customers.

SAIL is in a mess today and it’s a national tragedy. Government needs to quickly take re-organisation and re-structuring steps to salvage what could be, else it will become a pariah that nobody would like to touch with a barge pole even if offered for sale at bargain basement price. Present Management seems incapable of turning around the monolith.

SAIL with so much of potential and so much of wealth of assets, is struggling for survival, it is a sad state of affairs.

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