Steel Authority of India Ltd Management Discussions.

The Management of Steel Authority of India Limited (SAIL) presents its Analysis Report covering the performance and outlook of the Company.


World Economic Environment

Global economic output grew by 3.6% in 2018, as estimated by IMF in its April 2019 World Economic Outlook update. The Global Economy continued to expand, with growth in Advanced Economies (estimated 2.2% growth in 2018) as well as in Emerging Market and Developing Economies (estimated 4.5% growth in 2018).

Weakness experienced in the second half of 2018- against the backdrop of weakening financial market sentiment, trade policy uncertainty, and concerns about Chinas outlook, is likely to carry over to coming quarters, with global growth projected to decline to 3.3% in 2019 before picking up slightly to 3.6% in 2020. Overview of World Economic Outlook Projections is as under:

World Economic Outlook Projections (Percentage Change)

Year Over Year
Estimate Projections
2018 2019 2020
World Output 3.6 3.3 3.6
Advanced Economies 2.2 1.8 1.7
United States 2.9 2.3 1.9
Euro Area 1.8 1.3 1.5
Japan 0.8 1.0 0.5
Emerging Market and Developing Economies 4.5 4.4 4.8
China 6.6 6.3 6.1
India 7.1 7.3 7.5
Brazil 1.1 2.1 2.5
Russia 2.3 1.6 1.7

Source: IMF World Economic Outlook Update, April 2019 World Steel Scenario

In 2018, Global Crude Steel production as reported by World Steel Association, increased by 4.6% to reach 1808.6 million tonnes(MT) compared to 2017. Crude Steel production increased in all regions in 2018 except in the Europe, where output was flat.

Asia accounted for 1271.1 MT of Crude Steel production in 2018, an increase of 5.6% compared to 2017. China continued to dominate World Crude Steel production with an output of 928.3 MT, at a growth of 6.6% over 2017. In 2018, Chinas share of Global Crude Steel production increased to 51.3% compared to 50.3% in 2017. Indias Crude Steel production in 2018 increased by 4.9% to reach 106.5 MT, thereby replacing Japan as the Worlds second largest steel producing Country.

Japan produced 104.3 MT in 2018, a decline of 0.3% compared to 2017. South Koreas Output of Crude Steel stood at 72.5 MT in 2018, a growth of 2% over 2017. The US also saw growth in Crude Steel output by 6.2% to reach 86.7 MT in 2018.

Top 10 Steel Producing Countries

Rank Country 2018 (MT) 2017 (MT) % Change
1 China 928.3 870.9 6.6
2 India 106.5 101.5 4.9
3 Japan 104.3 104.7 -0.3
4 United States 86.7 81.6 6.2
5 South Korea 72.5 71.0 2.0
6 Russia 71.7 71.5 0.3
7 Germany 42.4 43.3 -2.0
8 Turkey 37.3 37.5 -0.6
9 Brazil 34.7 34.4 1.1
10 Iran 25.0 21.2 17.7

Source: World Steel Association

World Steel Association has forecast that Global steel demand will increase by 1.3% in 2019 and reach 1735 MT. Steel demand in China is expected to moderate to 1% in 2019. In the Emerging and Developing Economies excluding China, steel demand is forecast to grow by 2.9% in 2019.

Indian Economic Environment

GDP growth for the Financial Year 2018-19 has been estimated at 6.8% at constant prices as per the provisional estimates of National Income by the Central Statistics Office (CSO), compared to 7.2 % in Financial Year 2017-18. The sectors that recorded high growth (~ 7%) were Construction, Manufacturing, Electricity & Utilities, etc.

The cumulative IIP growth for the period April to March 2018-19 over the corresponding period of the previous year stood at 3.6%. IIP growth rates for mining, manufacturing and electricity sectors for the April-March 2018-19 period were 2.9%, 3.6% and 5.2% respectively. In the same period, while consumer durables registered a good growth 5.5%, consumer non-durables registered a growth of 3.9%. Capital goods registered a growth of 2.8%, while Infrastructure/Construction goods registered a growth of 7.5%. Cumulative growth of the overall index for eight core sectors during April-March 2018-19 was 4.3%. Steel index increased by 4.7% during April to March, 2018-19.

Indian Steel Scenario

As per Joint Plant Committee (JPC), production of Crude Steel during fiscal 2018-19 stood at 106.6 million tonne, at a growth of 3.3 % over same period last year. Finished Steel production also registered a growth of 3.7% to reach 131.7 MT during 2018-19, compared to same period last year. Exports of total Finished Steel decreased substantially by 33.9% to 6.36 MT during 2018-19 over last year, while imports increased by 4.7 % to 7.83 MT.

Indias consumption of total finished steel saw a growth of 7.5% in 2018-19 over same period last year. Demand for Finished Steel in India is expected to grow at 7.1% in 2019, as projected by World Steel Association.



• With an accelerated push from the policies proposed by the new Government regarding steel intensive segments such as infrastructure, capital goods and construction, India is all set to become the 2nd largest steel consumer in the world in the immediate future.

• The newly commissioned mills are oriented towards products required to cater to the infrastructure development.

• High export potential for markets of Middle East and South East Asia.

• Potential for improving product quality and reducing cost through operational efficiency and utilization of the new and modernized units.


• Cheap import of steel.

• Volatility in coal prices and exchange rate.


• Internally, there have been deficiencies in the form of delays in the ramping up of production, due to initial stabilization of the new mills. Further, higher capital related charges on account of incremental Depreciation and Interest on new facilities have also increased expenses.

• Chiria mines in Saranda forest in Jharkhand, for which lease was granted about seven decades ago, but the mining activities in the different leases of mine could not resume due to delay in grant of Forest Clearance. Later in 2016, MoEFCC has linked the grant of Forest Clearance for iron ore mining leases operating in Saranda forest with approval of Management Plan for Sustainable Mining (MPSM) which was approved by MoEFCC in June, 2018.

Major apprehension about Chiria leases emerging from the approved MPSM is that the final decision on grant of Forest Clearance for Chiria leases may not happen in near future and may be decided only after near exhaustion of the mineral deposits in eastern boundary in identified mining zones and availability of suitable technology for extraction of mineral from bio-diverse forest area without damaging the forest and wildlife.

Out of the available iron ore resources of about 3700 MT with SAIL, about 54% i.e. 2000 MT is available at a single location viz. the Chiria mines which is not only critical for future expansion but will also take care of existing expansion in view of other depleting resources. Keeping in view of already completed modernisation and expansion programme and future expansion programme in view of National Steel Policy, 2017, development of a large mechanised iron ore mine at Chiria is need of the hour and can be done only when Chiria leases are excluded from no mining zone as per the approved MPSM.

Consequent upon the intervention of Ministry of Steel and Govt. of Jharkhand, it was decided that a committee will be formed to suggest appropriate modifications /amendments in MPSM. Since then, two meetings were held during Dec, 2018 and Feb, 2019 but no conclusive decisions in this regard have been taken so far.

• Stage-I FC for development of new mining pits at South and Central blocks of Kiriburu and Meghahatuburu mines, development of mechanized iron ore mine covering four leases of Chria and Capacity Expansion of Gua mine were granted during the period October, 2010 to March, 2014 and Compliance Report for these mines was forwarded by Govt. of Jharkhand for approval of MoEFCC during July, 2015- April, 2016. But later on MoEFCC has linked the grant of Forest Clearance for mines in Saranda forest with finalisation of MPSM for Saranda Forest.

Post approval of MPSM, as Gua and Kiriburu-Meghahatuburu leases were part of mining zone of MPSM, MoEFCC vide letters dated 26.08.2018 and 03.07.2018 requested Govt. of Jharkhand to provide information regarding Forest Clearance(FC) proposals of South-Central Blocks of Kiriburu-Meghahatuburu and Duargaiburu lease of Gua mine respectively.

Though, requisite information was provided by Govt. of Jharkhand in November, 2018 itself but after examining the proposals for about three months once again in Feb/March, 2019, MoEFCC had asked for further clarifications on the proposal from Govt. of Jharkhand showing inability in acceptance of land earmarked for compensatory afforestation as more than 20% of land identified is part of moderately dense forest(MDF). Fresh land patches are being identified and may further delay in grant of Stage-II FC.

• In view of revised Guidelines dated 1st April, 2015, issued by the Ministry of Environment, Forest and Climate Change (MoEFCC), Government of India, there is a requirement of payment of NPV (about र1,100 Crore) for entire forest land within mining lease area.

Being a Government Company, SAIL has taken up the matter with MoEFCC, GoI for exemption of payment of NPV for entire forest land in a mining lease in lieu of the general approval being provided through referred Guideline, though being a Government Company, SAIL is not required to take such approval under FC Act. Though, vide OM dated 01.01.2019, MoEFCC provided the opinion of AGI to SAIL which is in line with the interpretation of FC Act made by SAIL but still MoEFCC is insisting upon payment of NPV for entire forest land covered under mining lease and further linked the grant of EC for Kalwar-Nagur mining lease of BSP with payment of NPV for entire forest land in mining lease.

SAIL has challenged the various notices received from different State Govts. about payment of NPV for entire forest land in mining lease in respective High Courts and on the merit of the case, notices have been stayed.

In one such matter, Chhattisgarh High Court vide order dated 11.09.2018, directed MoEFCC to convene a meeting of the stakeholders to present their arguments and submission on the issue related to MoEFCCs Guideline dated 01.04.2015, so that an opinion emerges at the level of MoEFCC. Consequently, two meetings were held under the Chairmanship of Secretary, MoEFCC on 27.11.2018 and 22.01.2019. SAIL has submitted its representation during the second meeting. In the final hearing held on 17th and 19th June, 2019, Honble Court heard all the parties at length, including pleadings made by the UOI, Chhattisgarh State Government and SAIL. The case has been posted for next date of hearing.

• Consequent to the judgement dated 2nd August, 2017 of the Honble Supreme Court in the matter of Common Cause, State Governments of Odisha and Jharkhand have issued Demand Notices of र204.58 crore and र1759.02 crore respectively and State Government of Chhattisgarh has issued Show Cause Notices amounting to र8,349.09 crore for payment of compensation under section 21(5) of the MMDR Act and for EC violations related to iron ore, flux & coal mines till date.

In case of iron ore and flux mines, SAIL has challenged these notices in respective High Courts whereas in case of coal, the matter has been challenged before Revisionary Authority, Ministry of Coal.

• Tasra coal block was allocated to SAIL in October, 1995 by Ministry of Coal(MoC), Government of India. The mining lease of 4.5 Sq. Km area was transferred from BCCL to ISP-SAIL (erstwhile IISCO) on 10th June, 2002. Later, on application for renewal of Tasra mining lease, Government of Jharkhand stated that the lease had already expired at the time of transfer in the year 2002. Government of Jharkhand vide letter dated 21.04.2017 has asked MoC to clarify on the position of Tasra lease. In response, MoC vide letter dated 06.06.2018 has requested Government of Jharkhand to take necessary actions under the provisions of MMDR Act, 1957 & Rules made thereof and Coal Mining Nationalisation, Act 1972 & 1973.

Further, Govt. of Jharkhand vide letter dated 08.10.2018 has again referred the matter to MoC with a request to exercise powers u/s 31 of MMDR to give relaxation by condoning the delay in filing of application of renewal and approval of transfer of Tasra lease made between BCCL and SAIL so that renewal application may be processed in favour of SAIL as per the earlier directions of MoC received vide letter dated 06.06.2018. In response, MoC on 23.04.2019 has forwarded the case to Ministry of Law & Justice for its opinion. On account of delay in renewal of Tasra mining lease, development work at Tasra is getting affected.

• In order to reduce its dependability on imported coking coal, with the intervention of Ministry of Steel, two Coking Coal blocks namely Sitanala and Parbatpur were allotted to SAIL through allotment route on 31.08.2015 and 23.03.2016 respectively.

However, due to decrease in the Coal Mining Lease areas for both the coal blocks, the proposals to return the Parbatpur and Sitanala Coal Blocks to Ministry of Coal (MoC) were approved by SAIL Board on 01.03.2018 and vide letter dated 08.03.2018 and 12.03.2018, Nominated Authority, Ministry of Coal, Government of India was intimated about returning of Parbatpur and Sitanala coal blocks respectively, with a request to refund the amount paid including Bank Guarantee submitted by SAIL at the time of allocation of blocks. SAIL had also requested MoC for allotment of potential coking coal blocks in lieu of Parbatpur and Sitanala Coal Blocks in line with NITI Aayogs recommendation.

On account of indigenous coking coal of required quality not being available in sufficient quantity, SAIL is mainly depending on imported Coking Coal and is pursuing the matter through Ministry of Steel for taking up with Ministry of Coal for allocation of suitable coking coal blocks under Government Dispensation route in lieu of surrendered coal blocks.

• Based on the temporary permission granted by Government of Jharkhand, captive coal mines lifted the sand for ongoing stowing activities. However, after discontinuation of the same in 2013, the coal mines had to depend upon private sand leases, where supply was irregular. Therefore, to maintain consistency of coal production as well as safety of workmen in underground mines, on 13.12.2015, SAIL requested District Mining Officer, Dhanbad for reservation of sand mining areas at Dungri Ghat, Het Kandra Ghat, Chasnalla Ghat and Tasra Ghat on the bank of river Damodar for sand stowing of underground mines of Chasnalla and Jitpur which were earlier used by SAIL coal mines. Consequently, on 25.05.2017, Government of Jharkhand forwarded the proposal for approval of Ministry of Coal (MoC), Government of India. In response to the query dated 13.11.2017 of MoC, information was forwarded by Jharkhand State Government to MoC on 27.08.2018. Since then the matter is being followed with MoC for early reservation of areas of sand for stowing in favour of SAIL.


Indias economy slowed down to less than 7% in 2018-19 due to declining growth of private consumption, tepid growth in fixed investment and exports. The new Government is expected to take up requisite measures to reverse the slowdown of the economy - specifically to bring back growth of agriculture and in industrial sectors. With continued thrust on infrastructure and related projects from Government of India, steel sector stands poised to benefit.



• SAIL continues to be among the leading steel producers of the Nation.

• Multi located production units give SAIL an edge over other domestic steel players.

• A large number of new and modernised units after completion of the on- going modernisation and expansion.

• Well established nationwide marketing and distribution network helps in enhancing the reach of SAIL products across the Country.

• Most diversified product range offered by any domestic steel company.

• Availability of land bank at existing Plant/Unit locations for future brown- field expansion.

• Input security - 100 per cent integration in iron-ore.

• Highly qualified professionals with experience in steel making.


• Dependence on external sources for key input i.e. coking coal leads to exposure of the Company to the market risk.

• Ageing employee mix along with a high manpower cost and relatively low manpower productivity.



SAIL achieved sales turnover of र66,267 crore during the Financial Year (FY) 2018-19, higher by 16% as compared to corresponding period of last year (CPLY) turnover of र58,297 crore mainly due to increase in Net Sales Realisation (NSR) of Saleable Steel of 5 Integrated Steel Plants (16%). During the FY 2018-19, the Profit before Tax and after Tax at र3,338 crore and र2,179 crore as compared to loss in CPLY reflect turnaround performance of the Company by 540% and 552% respectively over last year. Although no provision for income tax has been made, the Company has created deferred tax liability of र1,154.23 crore. The comparative performance of major financial parameters during the FYs 2018-19 and 2017-18 is given below:

(र crore)
Particulars 2018-19 2017-18
Sales Turnover 66267.30 58297.26
Less: Excise Duty - 1403.90
Net Sales Turnover 66267.30 56893.36
Profit before interest, depreciation, exceptional/abnormal items and tax (EBIDTA) 10282.87 5184.37
Less: Interest and Finance Charges 3154.92 2822.75
Less: Depreciation 3384.72 3064.92
Profit after interest, depreciation, but before exceptional/abnormal items and tax 3743.23 -703.30
Exceptional items -405.34 -55.64
Profit(+)/ Loss(-) before tax 3337.89 -758.94
Less: Provision for taxation 1159.07 -277.23
Profit(+)/Loss(-) after Tax 2178.82 -481.71
Other Comprehensive Income 259.08 186.32
Total Comprehensive Income (+)/Loss(-) 2437.90 -295.39
Net Worth 38152 35714
EBIDTA to Net sales (Operating 15.52 9.11
Profit Margin) (%)
Net Profit Margin (%) 3.28 -0.84
Return (PAT) on Net worth (%) 5.71 -1.35
EBIDTA to average capital employed (%) 15.33 8.75
Earning per share of Rupee 10/- each 5.27 -1.17
Debtors Turnover Ratio (Days) 25 24
Inventory Turnover Ratio (Days) 6.40 7.63
Interest Coverage Ratio (No. of Times) 1.79 0.61
Current Ratio 1.36:1 1.23:1
Debt Equity Ratio 1.18:1 1.27:1

As compared to last year, the performance in the FY 2018-19 has improved mainly on account of higher Saleable Steel production (7%), and increase in Net Sales Realisation of Saleable Steel of 5 Integrated Steel Plants (16%), sales of secondary products, lower voluntary retirement compensation, lower Coke Rate, etc. However, the same has been partially offset by increased imported coking coal rate, purchased power rate, increase in repairs & maintenance expenditure, stores & spares expenditure, security expenses, royalty rates on Iron Ore, foreign exchange loss, higher imported coal in blend, higher usage of Iron Ore, limestone and dolomite, provision for differential royalty on Bolani and Barsua Iron Ore Mines as well as Entry Tax in UP State consequent to the Order of Honble Allahabad High Court, amortization of stamp duty and registration charges and higher interest expenses and depreciation charges due to capitalisation of new facilities.

During the current quarter compared to CPLY, the turnover at र18,323 crore was higher by 9% as compared to CPLY. The Profit before Tax and after Tax at र 712 crore and र469 crore is lower by 40% and 42% respectively over CPLY.

The profit has occurred mainly on account of higher production of Saleable Steel (14%), increase in sales volume of Saleable Steel (11%), increase in sales of secondary products, decrease in salary and wages, lower VR compensation, decrease in repairs & maintenance expenditure, stores & spares expenditure, power & fuel expenses, etc. However, the same has been partially offset by lower net sales realisation (2%) of Saleable Steel, increased imported coking coal rate, increase in security expenses, royalty rates on Iron Ore, higher imported coal in blend, higher usage of coking coal, limestone and dolomite, provision for amortization of stamp duty and registration charges and higher interest and depreciation cost.

As compared to CPLY Interest Coverage Ratio and Return on Net Worth has improved significantly during FY 2018-19. Interest Coverage Ratio has improved from 0.61 as on 31.03.2018 to 1.79 as on 31.03.2019 on account of significant improvement in EBITDA during FY 2018-19. Return on Net Worth has improved from (-) 1.35 as on 31.03.2018 to 5.71 as on 31.03.2019 as a result of improved profitability of the Company.

1.2 Initiatives Taken by the SAIL Management

1.2.1 Turnaround Plan

In order to meet the challenges of adverse business environment, a Company-wide turnaround exercise named SAIL Uday was initiated during 2016-17. As a part of the SAIL Uday exercise, SAIL engaged M/s. Boston Consulting Group, a leading global Management Consultant, to study the health of the Company, suggest suitable measures for its turnaround and provide hand holding support and assistance to SAIL for implementation of approved road map for turn around. The study phase of SAIL Uday culminated in October, 2017 with the submission of the Comprehensive Turnaround Roadmap Report by M/s. Boston Consulting Group. The Roadmap contains recommendations encompassing various functional areas of the Company including Raw Materials, Production, Sales & Marketing, Supply Chain & Logistics, Manpower & Productivity, etc. SAIL is presently in the process of implementation of the recommendations which are expected to contribute towards improvement in the Companys performance.

1.2.2 Cost Control Measures

• Emphasis on cost reduction with improvement in productivity continued during the year through process improvement and efforts by R&D. Awareness was created at all levels to control cost in all areas of operation.

• Strategic actions such as optimizing coal blend, improvement in yields, reduction in coke rate, enhanced concast production, sale of idle assets and maximizing use of in-house engineering shops resulted in enhanced cost reduction during the year.

• During the Financial Year 2018-19, a total of 448 employees separated from the services of the Company through the Voluntary Retirement Scheme (VRS), 2018.

1.2.3 Marketing

Your Company has taken a number of initiatives during the Financial Year 2018-19 aimed at sustaining and consolidating its position as the leading steel producer of the Country.

Further, with a view to widening the options that the Company makes available to customers and to meet their needs for customized or specific application steels, a number of new products were developed in 2018-19, including the following:

• Quenched and tempered Plates SAIL WR400 12 mm developed by RSP for EME segment and supplied to non defence customers for the first time.

• ASTMA 517 Grade F has been developed at RSP and supplied to a Hydroelectric project in Himachal Pradesh.

• EN10025-6 S690QL grade PMP developed at RSP were supplied for use in a DRDO project.

• Railways have stopped production of ICF design coaches and shifted to production of LHB Coaches. Wheels for LHB Coaches are at present being imported by Indian Railways. Your Company received developmental order for 1000 LHB Wheels in the month of February, 2018 and has successfully developed the wheel. First lot of 30 wheels was despatched for field trials in March, 2019.

• Your Company received a developmental order for 400 wheels for Kolkata Metro in December, 2017, which has been successfully developed and supplied. Further, the Company has requested for regular orders from the Railway Board.

• In order to meet the requirement of Defence, the Company has developed DMR 301 grade plates of ultra high strength for under water applications.

• Material has been supplied for re-construction of the Mahatma Gandhi Setu, connecting South and North Bihar and for long,considered to be the lifeline for the people of Bihar travelling across the Ganges. As per the original design, the plates were required in ASTMA-709 HPS-485 70W Grade, which was changed to IS2062 E 410C Grade so that material could be sourced from indigenous sources. Your Company has supplied IS2062 E 410C grade plates as per stringent ITP (Inspection and Test Plan).

In order to introduce customers to the advantages offered by SAILs new product range, your Company formed dedicated Cross Functional Teams for marketing products from the new mills at IISCO, Durgapur, Rourkela and Bokaro Steel Plants and engaged with new market segments. Seminars, workshops and meetings were organized with end users, architects, structural designers, consultants, etc. Further, interactions were held with Plant personnel in order to achieve a mutual understanding of the requirements on one hand and production parameters on the other. New mill Parallel Flanged structurals from the New Mill of ISP have been brought under a new brand name "NEX".

Your company has the largest marketing network among all steel producers in the Country. As on 1st April, 2019, SAILs functional network of marketing offices consists of 37 Branch Sales Offices, 10 active Customer Contact Offices, 25 Departmental Warehouses and 20 functional Consignment Agency yards. Marketing effort is further supplemented through SAILs Retail Channel that reaches the products of mass consumption to remote corners of the Country.

SAIL had been meeting retail demands of TMT bars and Galvanised products through Dealer channel. In order to deepen the reach to the end customer in the Retail Segment through an efficient distribution channel and provide value addition in product, delivery and services to customers, 2-tier Dealer-Distributorship channel was introduced. As on 1st April, 2019, dealer network consisted of 1789 dealers, out of which 858 dealers have been added by the 14 Distributors, appointed under 2-tier distributorship. This huge network spreading across the Country helps in meeting the requirements of a wide range of customers across throughout India.

1.3 Funds Management

There is decrease in the borrowings of the Company from र45,409 crore as on 31st March 2018 to र45,170 crore as on 31st March, 2019. The debt equity ratio of the Company as on 31st March, 2019 is 1.18:1 as compared to 1.27:1 as on 31st March 2018. The interest and finance charges on operation account during the current year at र3,155 crore are higher by र332 crore over CPLY. The Net-worth of the Company has increased from र 35,714 crore as on 31st March 2018 to र38,152 crore as on 31st March 2019. M/s CARE Ratings, M/ s India Ratings and M/s Brickwork Ratings, RBI approved credit rating agencies, assigned CARE AA- Outlook: Stable, India Ratings AA- Outlook: Stable and BWR AA Outlook: Negative ratings respectively for SAILs long-term borrowing programme. The trend of borrowings and Net-worth is given as under:

1.4 Contribution to SAIL Gratuity Trust

The total contribution made by the Company to SAIL Gratuity Trust upto 31.03.2019 was र3,349.09 crore. The fund size has grown to र6,277.44 crore as on 31.03.2019, net of settlement done towards payment of Gratuity.


2.1 Revenue from Operations

a) Sale of Products

(र crore)
Particulars FY 2018-19 FY 2017-18 Change %
Sales of Saleable Steel Products 62541.86 55481.04 12.73
Sales of Other Products 3725.44 2816.22 32.28
Total Sales Turnover 66267.30 58297.26 13.67
Less: Excise Duty 1403.90*
Net Sales Turnover 66267.30 56893.36 16.47

*Excise Duty is for the period upto 30th June 2017 which has been discontinued upon implementation of Goods and Services Tax (GST) w.e.f. 1st July 2017. Turnover is net of GST as per the requirement under INDAS.

b) Trend of Domestic Sales and Exports

The Company catered to almost the entire gamut of the mild steel business namely, Flat Products in the form of Plates, HR Coils/Sheets, CR coils/sheets, Galvanised Plain/Corrugated Sheets and Long products comprising Rails, Structurals, Wire-Rods and Merchant Products. In addition, Electric Resistance Welded Pipes, Spiral Welded Pipes and Silicon Steel Sheets formed part of the Companys rich product-mix. The product category-wise sales turnover during the FY 2018-19 is given as under:

Products Category % of Sales value
Saleable Steel
Flat Products (including Pipes & Electrical Sheets) (a) 50
Long Products (b) 40
Integrated Steel Plants - Mild Steel (c = a + b) 90
Alloy & Special Steel Plants - Alloy & Special Steel (d) 4
Total Saleable Steel (e = c + d) 94
Secondary Products (Pig Iron, Scrap, Coal 6
Chemicals, etc.) (f)
Total (g = e + f) 100

c) Sale of Services - Service Charges

(र crore)
FY 2018-19 FY 2017-18 Change %
28.53 23.56 21.09

Revenue from sale of services increased by about र4.97crore during the current year.

d) Other Operating Revenues

(र crore)
FY 2018-19 FY 2017-18 Change %
671.48 641.54 4.67

Other operating revenues increased by about र29.94 crore over previous year primarily on account of higher realisation from sundries.

2.2 Other Income

(र crore)
FY 2018-19 FY 2017-18 Change %
532.82 484.45 9.98

Other income increased by about र48.37 crore over previous year mainly due to increase in interest income from customers and bank deposits and recovery of liquidated damages.

2.3 Expenditure

Particulars FY 2018-19 FY 2017-18 % Change
Raw Materials Consumed 32291 26678 21.03
Employee Remuneration & Benefits 8830 8850 -0.22
Finance Cost 3155 2823 11.76
Depreciation 3385 3065 10.44
Other Expenses 18829 16276 15.69

During the FY 2018-19, there was unprecedented increase in average imported coal prices and increase in royalty rates on iron ore which has affected the raw material cost substantially. Further, indigenous coal prices also increased in line with imported coal prices due to invoking of imported coal price parity by domestic coal companies. During the year, the Employees Remuneration & Benefits have decreased mainly due to reduction in manpower numbers on account of natural separation and voluntary retirement scheme. Higher finance cost was due to increase in interest rate of borrowings and increase in depreciation was due to capitalization of new facilities. The increase in other expenses was on account of increase in the cost of stores & spares, repairs & maintenance, power & fuel, royalty and cess, etc.

2.4 Contribution to Exchequer

During the year, SAIL contributed र13,520 crore to the national exchequer by way of payment of taxes and duties to various government agencies.

2.5 Non-Current / Current Assets

(र crore)
Particulars FY 2018-19 FY 2017-18 Change %
Non-Current Assets
(a) Property, Plant and Equipment 59907 57156 4.81
(b) Capital Work-in-Progress 16014 18395 -12.95
(c) Investment Property 1 1 31.33
(d) Intangible Assets 1451 1455 -0.26
(e) Financial Assets
(i) Investments 1585 1491 6.27
(ii) Trade Receivables
(iii) Loans 564 448 25.81
(iv) Other Financial Assets 258 166 55.50
(f) Deferred Tax Assets (Net) 2898 4185 -30.74
(g) Non current tax assets (Net) 154 190 -19.27
(h) Other non-current assets 1357 1079 25.78
TOTAL NON-CURRENT ASSETS 84189 84567 -0.45


(र crore)
Particulars FY 2018-19 FY 2017-18 Change %
Current Assets
(a) Inventories 19442 16997 14.39
(b) Financial Assets
(i) Trade Receivables 4495 3870 16.15
(ii) Cash & cash equivalents 35 79 -56.46
(iii) Bank balances other than (ii) above 185 175 5.85
(iv) Loans 53 63 -16.04
(v) Other Financial Assets 2161 2772 -22.04
(c) Current Tax Assets (Net)
(d) Other Current Assets 5867 5634 4.14
(e) Assets classified as held for sale 11 33 -64.71
TOTAL CURRENT ASSETS 32249 29623 8.87
TOTAL ASSETS 116438 114190 1.97

• Property, Plant & Equipment increased by र2,751 crore mainly due to capitalization of new facilities.

• The capital work-in-progress decreased by र2,381 crore on account of capitalization of various capital schemes in steel Plants.

• Other Non-Current Assets increased by र278 crore.

• The inventories increased by र2,445 crore mainly on account of increase in raw materials inventory due to high quantity and price increase of imported coking coal.

• Increase in trade receivables was by र625 crore.

• Other Current Assets increased by र233 crore, mainly on account of Input Tax Credit receivable under GST law.

2.6 Non-Current/ Current Liabilities

(र crore)
Particulars FY 2018-19 FY 2017-18 Change %
Non-Current Liabilities
(a) Financial Liabilities
(i) Borrowings 30803 29777 3.4
(ii) Trade Payables 7 6 6.9
(iii) Other Financial Liabilities 1331 1179 12.8
(b) Long Term Provisions 4295 3973 8.1
(c) Deferred Tax Liabilities (Net)
(d) Other Non-Current Liabilities 253 138 83.0
Total Non-Current Liabilities 36689 35075 4.6
Current Liabilities
(a) Financial Liabilities
(i) Borrowings 10631 12244 -13.2
(ii) Trade Payables 7258 7540 -3.7
(iii) Other Financial Liabilities 14693 14170 3.7
(b) Other Current Liabilities 6706 7142 -6.1
(c) Provisions 2309 2304 0.2
(d) Current Tax Liabilities (Net) - - -
Total Current Liabilities 41597 43402 -4.2
Total (Current+Non-Current Liabilities) 78286 78476 -0.2

• Increase in long term borrowings by 3% was due to replacement of short term borrowings with long term borrowings.

• The short term borrowings decreased by र1,613 crore due to repayment of Commercial Paper and foreign currency Buyers Credit.


(र crore)
Plant/Unit 2018-19 2017-18
Bhilai Steel Plant (BSP) 509.37 645.88
Durgapur Steel Plant (DSP) 278.62 -270.85
Rourkela Steel Plant (RSP) 1472.21 -180.24
Bokaro Steel Plant (BSL) 1916.49 526.16
IISCO Steel Plant (ISP) -402.05 -988.55
Alloy Steels Plant (ASP) -40.64 -47.46
Salem Steel Plant (SSP) -259.00 -211.07
Visvesvaraya Iron & Steel Plant (VISP) -75.72 -108.90
SAIL Refractory Unit (SRU) 50.71 32.62
Chandrapur Ferro Alloys Plant (CFP) 11.20 19.30
Raw Materials Division/Central Units -123.30 -175.83
SAIL: Profit Before Tax (+)/Loss(-) 3337.89 -758.94


A number of initiatives were taken to reduce cost of inputs and improve the performance of materials management, some of which are summarized as under:

• Inventory Reduction: Despite higher volume of purchase of Stores & Spares (increase of about 26% on Y-o-Y basis), inventory holding as on 31st March, 2019 was reduced to 6.51 months as compared to 7.20 months as on 31st March, 2018.

• Purchase Cost Reduction: By adopting multi-pronged strategy in purchase of Bulk Items / Centralized Procurement Agency (CPA) Items, cost-savings of about र7.5 crore were achieved in areas like Ferro-alloys, etc.

• E-Procurement: E-tendering using Supplier Relationship Management/ Enterprise Procurement System platforms increased to 81.61% from 59.63% on Y-o-Y basis.

• Systems Improvement: Certain new/revised Policies and Procedures including CPA Guidelines, Implementation of BCG recommendations on procurement of Limestone, SAIL Procedure for Procurement on GeM, Training on GeM and TReDS, Redesigning of SAIL Tender website, e-Publishing of SAIL Tenders on CPP Portal and Review & Revision of PCP-2014 were issued during the Financial Year 2018-19. Besides these, Sambandh Portal of Govt. of India, an online module was developed for posting of data/information on MSME received from Plants/Units.


The Company endeavors to procure equipment, raw materials and other inputs from indigenous sources to the extent they become available to the Company, at the commercially acceptable prices/costs and meet the requirements of the technologies being used in the Company. For incurrence of expenditure in foreign currency, besides exercising the requisite control, it is ensured that it is in the commercial interest of the Company. Further, the Company has also taken reasonable steps to ensure that all receivables in foreign exchange, which are due to the Company, are realized within contractual period.


Besides Modernisation and Expansion Projects, the Addition, Modification & Replacement(AMR) Schemes have also been taken up which are required for management of existing operations and primarily focuses on improving the current level of efficiency and output in incremental measures. AMR Schemes are undertaken for improving or revamping of existing facilities for sustaining the existing operations, balancing / debottlenecking of production processes, improvement in energy & other resource consumption / services / safety and environment. Replacement includes mostly replacing the existing Plant & Equipment / facility with better performance Plant & Equipment / facility; Rebuilding of certain facilities like Coke Oven Batteries after its useful life is one of the types of Replacement Scheme. Accordingly, a number of AMR schemes costing around र7,244 crore are under implementation in different Plants of the Company as under:

• Construction of permanent Barracks at 21 locations for Rowghat Deposit, Upgradation of Stoves for Blast Furnace-4, Installation of Cast House Defuming System in Blast Furnace No.7, Setting up of Static facility for Environmentally Sound Management of Polychlorinated Biphenyls and Installation of Electro Static Precipitators as replacement of Multi Cyclones for all 4 nos. of Sinter Machine at Sinter Plant -II at Bhilai Steel Plant.

• Installation of a new Rotary Hearth Reheating Furnace at Wheel & Axle Plant, Power Evacuation for 2x20 MW New Power Plant, Replacement of Converter shells together with Bottom Stirring System & Installation of Secondary Emission Control in all the three Converters of SMS and Procurement of One no. Steam Turbine Rotor Assembly for Turbo-Blower Nos. 1-4 in Old Power Plant at Durgapur Steel Plant.

• Installation of New Hot Strip Mill at Rourkela Steel Plant.

• Provision of Hydraulic Mudgun cum Drill Machine for Blast Furnace -1, New Sinter Plant, Modernization of Steel Melting Shop-I, Upgradation of Stoves of Blast Furnace No. 1, Rebuilding of Coke Oven Battery-8, Upgradation of 6 nos. of Electro Static Precipitators of Lime Kiln, Replacement of Battery cyclones with Electro Static Precipitators in Sinter Plant and Development of alternate system for drawal of raw water from Damodar River from BSL & Township at Bokaro Steel Plant.

• 4 MW Power Plant at Chandrapur Ferro Alloy Plant.


Centre for Engineering & Technology (CET), the in-house design, engineering & consultancy Unit of SAIL provides the complete range of services from concept to successful commissioning of projects in the complete value chain of integrated steel plant and its mines. With a strength of about 250 qualified, trained and experienced engineers, CET has taken significant strides in mineral beneficiation, pellet plant, material handling, power plant, slag granulation plant, blast furnace stoves, water management, automation and many other related areas. The current major projects in its basket include Re-building of Coke Oven Battery No.8 at BSL, new 3.0 MT Hot Strip Mill and Installation of 4th Slab Caster in SMS-II at RSP, Installation of New Sinter Plant and Modernization of SMS-1 at BSL, Replacement of BOF Converter Shells with New Secondary Emission Control System and Installation of New Bar Mill at DSP, etc.


Your Company has one of the largest pool of qualified and experienced engineers, technologists, and professionally qualified HR & training experts. Based on its large and varied expertise and experience acquired over the last six decades, SAIL, through SAIL Consultancy Division, SAILCON provides design, engineering, training, technical & project management consultancy services in Iron & Steel and related areas and offers a wide range of services to clients globally. SAILCON is an ISO 9001:2015 certified quality organization and has actively undertaken ventures by drawing its strength from the extensive and varied expertise embedded in SAIL plants and units and served its esteemed customers as per their requirements.

Besides offering technological know-how, SAILCON also offers a wide range of training programmes including those involving development of skill and expertise in the related fields. Apart from training in the technical areas, SAILCON also provides training related to HR, Implementation of Quality Management System and various Management Development Programmes. Technical and Management Training services are its forte and these services have been availed of by several organizations in private and public sector within India and abroad.

"SAILCON" has executed assignments within India and abroad covering countries like Egypt, Saudi Arabia, Iran, Qatar, Thailand, Nepal, Philippines etc.

During the Financial Year 2018-19, SAILCON laid enhanced focus on taking up environment management related assignments as well as training assignments and imparted Simulator based Power Plant operation training to customers.


Research and Development Centre for Iron & Steel (RDCIS) of the Company is Indias premier research organization in the field of ferrous metallurgy. Recognizing that development and assimilation of new technologies & process innovations are basic tenets for sustainable growth, SAIL has given thrust for its R&D efforts through its well equipped R&D Centre located at Ranchi. It has more than three hundred diagnostic equipment and adequate pilot facilities under fifteen major laboratories. The Centre undertakes research projects encompassing the entire spectrum of iron & steel starting from raw materials to finished products. In the year 2018-19, 90 projects were pursued and 44 projects completed with substantial benefits to the organization.

Two projects are being pursued with assistance from Ministry of Steel: (a) Indigenous development of model based breakout prediction system for Continuous Casters, and (b) Development of automation system for optimum coal blending at coal handling plant of coke oven batteries.

RDCIS also pursues pioneering work in the area of development of niche products as per market requirements aiming at superior performance based on application. During the year 2018-19, twenty products have been developed and some of the noteworthy products include resistant steels for Indian construction segment, Boilers and Pressure Vessels, Spring steel for auto segments, Crane, Defence sector, etc.

In its pursuit for excellence in various research fields, RDCIS enters into collaboration mode of research in specific areas with renowned research institutions and academia. During the year 2018-19, MOU/ Collaboration agreements have been entered into with institutions and PSUs such as Indian Oil R&D; R&D Centre at Rashtriya Ispat Nigam Ltd. and NMDC Ltd.; C-DAC, Thiruvananthapuram; Central Building Research Institute, Roorkee.

The efforts of RDCIS engineers and scientists have culminated in filing of 20 patents and 18 copyrights (in association with SAIL Plants) during 2018-19. As many as 95 technical papers (45 international) were presented in seminars/ symposia/ conferences and 79 papers (24 international) were published in prestigious journals. In addition, RDCIS undertook contract research work and provided consultancy services and know-how to organisations outside SAIL.


The Company has an efficient Internal Control systems for achieving the following business objectives of the Company:

• Efficiency of operations.

• Judicious utilization and protection of resources.

• Accuracy and promptness of financial reporting.

• Compliance with the laid down policies and procedures.

• Compliance with various laws and regulations.

In SAIL, Internal Audit is a multi-disciplinary function which reviews, evaluates and appraises various systems, procedures/policies of the Company and suggests meaningful and useful improvements. It helps Management to accomplish its objectives by bringing a systematic and disciplined approach to improve the effectiveness of risk management towards good corporate governance.

The Company is constantly taking measures to make the Internal Audit function more effective. The Internal Audit is subject to overall control environment supervised by Board Level Audit Committee, providing independence to the Internal Audit function, emphasizing transparency in the systems and internal controls with appropriate skill-mix of internal audit personnel, etc. Audit Plan based on identification of key-risk areas with thrust on system/process audits and benchmarking of the best practices followed in the Plants/Units, is made and approved by Audit Committee of the Board so as to achieve overall efficiency improvement including cost reduction in operations of the Company. Training and development of Internal Audit Executives, bringing awareness amongst auditees, converging on the pro-active role of internal audit remained other focus areas during the year. The Audit Committee in its meetings with the Companys Statutory Auditors also ascertains their views on the adequacy of internal control systems in the Company and their observations on financial reports. The Audit Committees observations are acted upon by the Management. The Audit Committee, inter-alia, has also monitored /reviewed the following areas:

• Internal Audit Plan vis--vis performance.

• Periodic review of Enterprise Risk Management (ERM).

• Capital Work-in-Progress/Capital Advances.

• Status of Biometric attendance for preparation of salary.

• Energy Audit.

• Functioning of Vigil Mechanism in SAIL.

• Cost Audit Report.

• Age-wise status of inventory and its liquidation plan.

• Estate related issues.

The Internal Audit system is supplemented by well-documented Policies, Guidelines and Procedures and regular reviews are being carried out by the Internal Audit Department. The reports containing Significant Audit Findings along with settlement/updated status are periodically submitted to the Management and Audit Committee of the Board.


Certain statements in the Management Discussion and Analysis, describing the Companys objective, projections and estimates are forward looking statements and progressive within the meaning of applicable Laws and Regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors.