SAIL sees red as Q1 loss widens; time for disinvestment?

SAIL Chairman PK Singh

STATE-owned steel major SAIL reported a net loss for the June 2016 quarter increased to Rs 535 crore compared to Rs 248 crore in the quarter ended June 2015. The loss in June 2016 quarter was mainly due to an exceptional item after the company paid Rs 54.2 crore towards voluntary retirement compensation during the period. Total income from operations also eased to Rs 9,238 crore compared with Rs 9,493 crore in the quarter ended June 2015.
Last month, the company’s Chairman P K Singh said, “We are striving to produce higher net sales realisation...
products through ramping up our new facilities and completing balance modernisation. At the same time, we are exploring new markets both domestic and overseas. The company continues to focus on cost reduction initiatives.”
Earlier, in a bid to cut workforce in the advent of mounting losses, the Maharatna PSU decided to reintroduce the voluntary retirement scheme (VRS) which came into effect from May 1. It was almost after six years that SAIL came out with the offer to propel its employees to opt for VRS. The VRS scheme launched by the PSU in 2001-02 continued till 2008-09. When the scheme was launched, SAIL had a strength of more than 160,000 employees and the manpower cost accounted to nearly 16 per cent of the company’s gross sales — the highest among the steel makers. Post VRS and natural separation of employees, its manpower has been reduced to 88,655, of which 13,968 are executives and the remaining 74,687 being non-executives.
The VRS would be applicable for those employees who have worked for at least 15 years and whose minimum age is 50 years.
SAIL is India's largest steel producing company. With a turnover of Rs. 50,627 crore in the year 2014-15, the Maharatna PSU has five integrated steel plants, three special plants, and one subsidiary in different parts of the country. After PK Singh assumed charged as the chairman of SAIL, the goals of the PSU were modified. The Maharatna PSU is targeting steel production at 17 million tonnes for FY17 and 20 million tonnes for FY18. The PSU also plans to target 70 percent sales in the northern and eastern regions and increase its presence in the Make in India sectors like defence, aerospace and nuclear power. Apart from this, the company intends to sell idle assets, and reduce inventories of steel.
Earlier, credit rating agency, Fitch had downgraded SAIL's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB'.