India seeks ways to revive state steel
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seen by Reuters, criticises Steel Authority of India (SAIL) for everything from the use of low-quality raw materials to outdated technology, suggesting that its problems were not simply the result of cheap Chinese steel imports.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.