12-Sep-2013
State-run Steel Authority of India Ltd. said Thursday it is looking to save about 50 billion rupees ($787 million) over the next three years through improved operational efficiencies and related cost cuts.
Steel companies globally are hit by weak demand amid an increase in raw-material cost and they are cutting cost to reduce margin pressure.
Indian companies are affected also by a fall in the value of the rupee currency, which has further increased their cost on imported raw materials. Steel Authority sources iron ore locally, but imports coking coal.
"Indian steel companies are facing the dual challenge of high cost of production on one hand and lower sales realization [because of weak demand] on the other," Steel Authority said in a news release.
"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," it said.
Steel Authority will reduce wastage, improve operational efficiency and work at enhancing employee productivity to reach its target, the company said.
The company didn't give details on the plan. Its spokeswoman didn't immediately respond to phone calls.
The company produced 13 million metric tons of steel in the last financial year ended March 31. It has a target to increase production to 50 million tons a year by 2025.
Source:- online.wsj.com
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