The plate and sheet mill, a major economic unit of ASP, may also be closed down. At present, this mill has virtually no orders and its operations have been scaled down.

SAIL official sources however said that ASP has started structural adjustments and closure of unviable units, in order to get full benefits of the revival plan. Such structural changes are also being effected in other SAIL plants. Satna limestone mine of SAIL's raw material division, for example, has been closed down as its poor quality products were not accepted by Rourkela Steel Plant. Employees affected by such closures are being redeployed.

In view of the drop in market demand, ASP has planned for a production of 1,14,000 tonnes of saleable steel this fiscal, which is around 60 per cent of its rated capacity.

McKinsey & Co, whichhas made a turnaround strategy for SAIL and its units, has suggested that ASP should be closed down. SAIL chairman Arvind Pande, however, said that closing of ASP would be the last step.

A five-pronged strategy has been developed by SAIL for ASP's revival. First, transfer of liquid iron from neighbouring Durgapur Steel Plant to cut down the cost of production of steel. At present, ASP produces steel basing on melting scrap.

Second, conversion of soaking pits from fuel operation to electrical operation at a cost of Rs 1.5 crore and setting up of an electro-magnetic stirrer at steel melting shop.

Third, better techno-economics and cost control measures to yield an annual benefit of Rs 32 crore over the benefit of Rs 20 crore achieved last year.Fourth, gradually change the installed product profile as per market demand; ASP has to concentrate on higher production of mild or special steel blooms instead of slabs from the continuous caster.

Fifth, reduction in manpower from the present 5,500 to 3,000through voluntary retirement scheme. A senior SAIL official admitted that salaries and wages account for 36 per cent of ASP's present turnover as against an average of 15 per cent for SAIL as a whole, when SAIL itself is over-manned and has been advised by McKinsey & Co to reduce its manpower by 40 per cent.

Therefore, he said, the possibility of ASP's turnaround depends to a large extent upon the success of its ability to reduce manpower drastically.