In Search Of Lost Glory
Business Today|June 16, 2019
In Search Of Lost Glory

Once the undisputed leader, SAIL has been outrun by private sector peers JSW and Tata Steel. But the rejuvenated steelmaker is back in the black and eyeing the top spot.

Sumant Banerji
BARELY TWO WEEKS after he had taken over as the Chairman of India’s largest state-run steel company, 58-year-old Anil Kumar Chaudhary was staring at a major crisis. On October 9, 2018, an explosion at the Bhilai plant, the largest production unit of Steel Authority of India (SAIL), killed 14 workers. The blast occurred in a gas pipeline connected to the coke oven section of the plant during a maintenance job. It was not a one-off incident, though. On May 24, there was a minor fire at the Bhilai plant, though no one was injured. In June 2014, six people, including two deputy general managers, had died in that factory due to gas leakage. In a career spanning over three decades in the public sector company, Chaudhary’s tenure at the top started on a troubled note.

“It was really unfortunate... and I had to face it soon after I took charge. But we have become more careful now. We are doing whatever lies within our realm so that not even a single fatality happens at SAIL in the future. All our plants have been given strict instructions that no production will happen at the cost of safety,” he says.

Will Tailwinds Help?

If the Bhilai incident was baptism by fire, the new chairman has seen a lot of tailwinds as well. For instance, in spite of the tepidness around last year’s festive season that impacted consumer-centric sectors, domestic demand for steel was on the rise, pushing prices up considerably. During April-January 2018/19, India’s consumption of total finished steel stood at 79.98 million tonne (MT), a 7.8 per cent increase over the year-ago period, according to provisional data released by the Joint Plant Committee. The dark days of big imports (of cheap steel) and commodity dumping by China are no longer plaguing the industry. Better still, SAIL’s financial health seems to be on the mend.

Earlier, it was a different story. The central public sector enterprise (CPSE) suffered losses for three consecutive years between FY2015/16 and FY2017/18, resulting in a cumulative deficit of over 7,000 crore. It endured 10 consecutive quarters in the red – between April 2015 and September 2017 – just one short of its worst string of quarterly losses during 2000-2002.

By the time Chaudhary took over in September 2018, the storm had blown over to some extent. SAIL had been profitable for three consecutive quarters and was well on its way to posting a profitable fiscal after three years. In the first nine months of 2018/19, its revenue grew more than 15 per cent with a net profit of 1,710.42 crore against a net loss of 1,297.28 crore in the year-ago period.

The financial turnaround is a shot in the arm although SAIL has lost its coveted tag of India’s largest steelmaker. Sajjan Jindal-led JSW Steel overtook the company in 2016/17 to be in the pole position while Tata Steel bagged the top spot in the last fiscal, thanks to a capacity expansion following its acquisition of Bhushan Steel. SAIL’s catchy tagline – there is a little bit of SAIL in everybody’s life – no longer resonates with its current market position, and its fall from glory still rankles with Chaudhary (see graphic Losing Plum Position).

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June 16, 2019