BOKARO, Oct 6: Bokaro Steel Plant (BSL) of the Steel Authority of India Ltd (SAIL) will cut its costs by Rs 267 crore in 1997-98. It has already reduced its expenditure by Rs 80 crore in the first five months (April-August), according to its managing director KAP Singh.

These measures are part of SAIL's Rs 1000-crore cost-cutting move in this fiscal. The exercise was undertaken at the instance of SAIL chairman Arvind Pandey after profits of this major public sector steel producer declined sharply during the last fiscal.

"We have to cut our cost and improve product quality for survival," Singh said. The ongoing Rs 1800-crore modernisation would help improve quality of products, while cost-cutting would provide us an edge in the competitive market, he said.

Bokaro Steel executive director (operations) Barun Ghosal said cost reduction would continue and had to be structured in the day-to-day life of the plant. We were doing exactly this, he added.

The maximum reduction of around Rs 83 crore will be in the blast furnace operations being done through the reduction in blast furnace coke rate which came down from 594 kg to 571 kg per tonne of hot metal. The target was to bring it down to 562 kg by the end of the current fiscal, he said. This reduction of coke rate will help reduce cost by around Rs 64 crore.

Reduction in the screening loss of blast furnace coke from eight per cent to seven per cent will help reduce cost by around Rs 14 crore, while the rest will be achieved through reduction in specific consumption of manganese ore.

The production of steel by the blast furnace method also increased due to improved quality of raw materials, said company executive director (projects) UN Jha. However, he added that it needed further improvement since it was nowhere near the world standard.

The next-to-maximum cost-cutting of more than Rs 28 crore is expected to be in the coke oven and by-products plant through the increase in the yield of carbon monoxide gas, crude tar and naphthalene and increase in dry coal charge per oven as well as through reduction in imported coal blend from 50 per cent to 47 per cent.

Another major area for cost-cutting is power plant operations.

Around Rs 26 crore reduction will be achieved by cutting down consumption of furnace oil from 5500 kilolitre per month to 3000 kilolitre as well as through reduction in specific consumption of middling coal.

A sum of Rs 26 crore will also be saved through reduction in consumption of stores and spares, while another Rs 19 crore will be saved through reduction in consumption of stores, mechanical and electrical spares, conveyor belt, valves, pipes, bearings, lubricants for maintenance.

Reduction in lime consumption from 75 kg per tonne to 68 kg per tonne and ferro-manganese consumption from 8.5 kg per tonne to 8 kg as well as increase in metallic yield will help reduce cost by more than Rs 23 crore in the steel smelting shop.

Improved sinter plant operations will help save around Rs 22 crore. This will be achieved through reduction in specific consumption of iron ore fines from 960 kg per tonne to 915 kg, coke fines and flux, as well as through reduction in specific heat consumption and specific power consumption.

Energy management through reduction in naphtha consumption from 2168 kilolitre per month to only 250 kilolitre will help reduce cost by around Rs 11 crore.

Reduction in contractual expenses will help cut cost by more than Rs 8 crore. Increasing yields at the slabbing mill from 87.5 per cent to 88.4 per cent, at hot strip mill from 96.9 per cent to 97.5 per cent, reduction of specific consumption of zinc in cold rolling mill, reduction in make up water consumption and reduction in consumption of minor raw materials will also help Bokaro Steel Plant to cut costs.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.