"Production of SAIL in the current year is expected around 13 mn tonnes of salable steel. The growth will be in line with that of industry, of around 6 per cent over the pervious year’s," said S K Roongta, Chairman, SAIL.

"Demand from the construction sector has been improving. Other major sectors like automobiles and appliances are thriving and demand from these has been rising. Thus the outlook for the year is much better than that of the previous one, said the SAIL Chairman.

In an interview with IE, Roongta pointed to India affected by the unprecedented global developments of 2008: "in the first half of 2008, demand as well as international prices of steel and its raw materials reached a historic high; this was followed by a sharp dip from October 2008 onwards and demand shrank due to the global slowdown. There was also a fall in market prices. The auto industry world over suffered. These global developments had their impact on the Indian steel sector as well, with demand and prices dropping sharply from October 2008. "The SAIL chairman pointed to consuming segments deferring purchases and resorting to de-stocking in anticipation of lower prices. He expressed satisfaction that despite all these, India still maintained growth: crude steel production in 2008 was marginally higher at 55.2 mn tonnes (53.1 mn tonnes for 2007).

SAIL utilized the slack demand period to focus on costs: "the company re-oriented production to market demand, increased production of value-added steel and maximized production of finished steel. SAIL also improved consumption parameters and worked towards better logistics.

Record turnover…

It was thus the company achieved a record turnover of Rs. 48,681 crore for 2008-09. The company earned a profit before tax of Rs. 9404 crore and the profit after tax for the year was Rs. 6175 crore; the net worth increased by Rs. 5000 crore to Rs. 23,854 crore - more than five times the equity capital of Rs. 4130 crore.

In the five years 2004-05 to 2008-09, the company recorded a near 20 per cent growth in total salable steel production - from 10.65 mn tonnes to 12.05 mn tonnes. Net sales income in this period recorded a more than 50 per cent increase, from Rs. 28,523 crore to Rs. 43,150 crore thanks to a higher value added product mix and better prices.

The slowdown did impact industrywide performance in the first half of the current financial year, both due to a drop in demand and lower prices. Thus for the first six months of the year net sales of SAIL dropped from Rs. 22,902 crore for 2008-09 to Rs. 19,199 crore for 2009-10. Net profit for the six months registered a decline from Rs. 3845 crore to Rs. 2994 crore.

Roongta pointed to the revival in demand experienced in the subsequent months. The recovery should impact on the results of the year as a whole.

In recent years, SAIL has been expanding its reach to the rural sector. The SAIL chairman pointed to SAIL extending its authorized dealer network further to cover 625 districts in the country. There were 2406 dealers as on 1 April 2009 and sales through dealers registered over 50 per cent growth during 2008-09. Roongta pointed to over two- thirds of population living in rural areas and to the need to improve consumption by this segment.

Focus on raw material supplies

"Our operations are well-integrated from raw material to a variety of finished products. We have been developing new mines and we endeavour to ensure self-sufficiency in major raw material needs. We have taken the Tasra and Sitanala coal blocks and we will start mining soon. SAIL will also develop jointly with other PSUs new coal mines," said Roongta.

12mn tonnes of additional capacity...

SAIL is presently implementing a modernisation and expansion plan designed to add 12 mn tonnes to its hot metal capacity. It has taken several strategic initiatives to ensure supplies of essential raw materials notably iron ore and coking coal. The company has set up a joint venture along with CIL, RINL, NMDC and NTPC, named International Coal Ventures Pvt Ltd, to acquire coal assets overseas. SAIL also plans to set up a joint venture with Shipping Corporation of India to facilitate transportation of imported coking coal and other dry bulk cargos.

Roongta spoke of the focus on value-added special steels customized to user needs like the steel required by Navy for warships. For the construction industry, SAIL has introduced high strength, high quality, rust-resistant steels at low weights. SAIL has also introduced earthquake-resistant steel for seismic zones.

The SAIL chairman said his company has been constantly re-evaluating its needs of human resources. Presently SAIL employs around 118,000: "there has been natural attrition of employees. We identify skill gaps and go for fresh induction at different levels,” said Roongta.

The SAIL chairman referred to the problems of land acquisition becoming more challenging. Hence the focus of SAIL will be on brown-field expansion-that is expansion of existing units.

Roongta estimates Indian crude steel production to cross 100 mn tonnes over the next five years and that SAIL will emerge a strong global producer, highly competitive in terms of cost and quality. He expects SAIL's production capacity to increase to around 55 - 60 mn tonnes in the next 10 years.