Govt to retain Navratna status for loss-making SAIL

Govt to retain Navratna status for loss-making SAIL
PRESS TRUST OF INDIA

NEW DELHI, SEPT 10: Steel Authority of India appears to have survived the threat to its Navratna status of autonomy due to its sustained losses with the government favouring to continue its support to SAIL in view of the turnaround package approved by the Cabinet for it in February last.

"We have no plans to withdraw the Navratna status accorded to SAIL," Heavy Industry Minister Manohar Joshi said, adding there were provisions under which this autonomy package could be withdrawn if a corporation sustained losses for three consecutive years.

When contacted SAIL chief executive Arvind Pande said this was the time when the corporation, which got a Rs 8,400 crore revival package, needed the Navratna status more than any time.

SAIL has incurred losses of Rs 1,574 crore and Rs 1,720 crore in 1998-99 and 1999-2000 respectively and is projecting to turn the corner in three years' time. Besides during the first quarter of current fiscal the corporation posted over Rs 200 crore losses, with Pande saying that second quarter would not be as good as first quarter.

The Navratna package was conceived by the United Front government's Industry Minister Murasoli Maran in 1997 with the objective of turning the leading and profitable PSUs into global giants.

The package, according substantial powers to designated PSUs for taking investment, joint venture and commercial decisions at the board level without approaching government, has so far given to eleven PSUs including SAIL. However, SAIL started incurring losses in the very next year of its Navratna autonomy.

Joshi said "cabinet recently cleared a package to enable SAIL to turnaround. We would first like to see its impact... We want SAIL to become once again a profit making entity."

As per the package and attached conditions, SAIL was given the target of becoming profitable in the third year. SAIL had reported a net loss of over Rs 1,700 crore during 1999-2000 while in the first quarter of current financial year its losses stood at Rs 231 crore which showed an improvement of about 60 per cent over the corresponding period last year.

SAIL's losses came down primarily due to reduction in its interest depreciation outgo due to financial package which included waiver of loans of more than Rs 5,400 crore from the Steel Development Fund (SDF) and Government of India.

SAIL has also been permitted to carry out business restructuring by way of sale of non-core activities including power, oxygen and fertiliser plants, Salem steel plant and loss making Indian Iron and Steel Company (IISCO) through joint venture.

SAIL is expecting to complete the deal in power plants with the National Thermal Power Corporation (NTPC) as the latter would decide after the due diligence of three captive power plants at Bokaro, Rourkela and Durgapur. Pande said that SAIL would return to profits within the stipulated time period as signed in the memorandum of understanding with the government.