Sail unveils $786m three-year cost-cutting plan

India’s largest government-owned steel company, Steel Authority of India (Sail), plans to save Rs50 billion ($786 million) through cost optimisation initiatives over the next three years.

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The costs of production are being driven up by volatility in the price of coal, higher railway freight costs, power tariffs, royalties on minerals, and the depreciation of the rupee, Sail said on Thursday September 12.

Meanwhile, prices are flat due to prevailing market conditions, leading to strong pressure on margins.

A company spokesman did not respond to Steel First’s queries about the details of the plan.

Indian steel companies are facing the dual challenges of high production costs on one hand and lower sales on the other, Sail said.

Under the cost optimisation initiatives of Sail (COIS), the company plans optimisation of inputs; improvements to operational efficiency through optimal use of available assets; quick stabilisation of newly commissioned units; reduction of overhead costs; and improvements to employee productivity.

Sail is the second-largest steel company in the country. It has an installed steel production capacity of 13.5 million tpy but plans to increase this to 50 million tpy by 2025.

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