Government warns SAIL of action for ‘unsatisfactory’ performance

NEW DELHI: Steel major SAIL on Monday got a dressing down from the government over "unsatisfactory" performance and poor progress in expansion and modernization programmes, leading to cost escalations. While SAIL chairman C S Verma termed the Maharatna's performance as satisfactory, steel minister Beni Prasad Verma came down heavily on the company, warning that "administrative decisions" will be taken if performance is not turned around.

"I am not satisfied with the performance of SAIL over the last 1-2 years," the minister said at a meeting where the SAIL chairman was also present. He said SAIL's expansion and modernization programmes were not being completed on time, leading to cost escalations. "Improve performance and complete the work on time with responsibility," the minister added.

The minister said that SAIL should have boosted its production. "Demand is not less. It is too much and cannot be met." He said that SAIL should make "time-bound plans" to finish expansion plans on schedule. "If not, administrative decisions will need to be taken," the minister said, adding that the government will form a committee to fix responsibility.


However, SAIL's chairman said that the company was going ahead with expansion plans and will increase production by 70% by the middle of next year. "We have earmarked investments of Rs 72,000 crore, of which an expenditure of Rs 36,000 crore has already been incurred. We plan to hike SAIL's capacity from 14 million tonnes to 24 million tonnes by June next year."

When asked to comment on the minister's observations that things were progressing at a slow pace at SAIL, he said, "We are very much satisfied." The PSU expects a 7% growth in revenues in 2011-12 to Rs 51,000 crore. SAIL's profit in the third quarter of 2011-12 had dipped 43% to Rs 632 crore while revenues had declined 5% to Rs 10,729 crore. SAIL will be announcing results for the full fiscal later this month.

Speaking about other plans, the SAIL chairman said that the PSU-led public-private consortium has received a letter of intent from the Afghanistan government to mine three iron-ore blocks in the country's Hajigak province. A formal JV agreement is yet to be signed. "We hope to sign a joint venture agreement soon," Verma said.

SAIL's Verma said the company is also in final stages of discussions about building a steel plant in Afghanistan.

ICVL's existence looks uncertain after CIL exit

NEW DELHI: International Coal Ventures Ltd (ICVL), the government's ambitious special purpose vehicle formed to acquire mines abroad, appears to be going nowhere. SAIL chairman C S Verma on Monday said that ICVL will have to be recast if Coal India (CIL) - a major constituent of the venture - pulls out of it.

"ICVL will have to be restructured if CIL moves out," Verma said, though adding that he has no confirmation on the coal major's exit from the venture, formed in 2009.

ICVL, a joint venture between SAIL, CIL, RINL, NMDC and NTPC - was conceptualized by the steel ministry for securing the much-needed coking coal and thermal coal assets in overseas territories. Reports suggest that CIL board decided to exit from ICVL on Friday after finding no merit in being a part of it. SAIL and CIL each hold 28% stake and RINL, NMDC and NTPC 14% each in ICVL. NTPC had already expressed desire to move out of the venture last year.