NEW DELHI: State-run Steel Authority of IndiaBSE 1.32 % has launched a cost optimisation initiative that it hopes will help it save about Rs 5,000 crore over the next three years. The company will focus on input optimisation, improving operational efficiency, quick stabilisation of newly commissioned units and reducing overhead costs, SAILBSE 1.32 % said on Thursday.
"The cost of production is being driven up by the volatility in the prices of coal, higher railway freight, power tariff, royalty on minerals, depreciation of the rupee, etc., while prices are flat due to prevailing market conditions, leading to severe pressure on margins," the company said in a press release.
The cost optimisation decision was taken at the company's 'strategic confluence on cost control and cost competitiveness' meeting in Ranchi recently. It was attended by all functional directors and CEOs of the steel maker's integrated steel plants. At the two-day meet, chairman CS Verma "urged participants to think out of the box and walk the extra mile to enhance competitiveness of the company", according to the company statement.
The steel producer is facing delays in its expansion plans at a time when costs have risen and sales realisation is low. SAIL's Rs 72,000-crore modernisation and expansion plan includes 9 million-tonne brownfield capacity addition and value addition to take its steel capacity to 23 MT.