The steel ministry is likely to soon direct SAIL to concentrate more on producing value-added products, deviating from its current focus on brown-field expansions, sources in the ministry said.
So far, SAIL has primarily focused and invested more on brown-field expansion of similar steel capacity with limited value-addition in terms of high-end product development.
“The steel ministry will direct the CPSE to develop a policy for future investment, so that impetus could be given for development of value-added steel capacity which will not only help SAIL to improve its realisations but will also add to their top-line and bottom-line growth,” said the source.
The ministry also wants SAIL to compete with not just domestic private sector players and cater to the requirement of the MSME steel sector, but also be globally competitive.
Presently, SAIL is on the verge of completion of its INR 72,000 crore modernisation and expansion programme. It will take 2-3 years for the state-run firm to ramp up its production capacities.
“We will ask SAIL to increase its focus on core competencies and divest non-core assets through mergers and restructuring, in order to provide the company economies of scale,” he said.
The government has already given its approval to SAIL to divest its three plants – Alloy Steels Plant, Salem Steel Plant and Visvesvaraya Iron and Steel Plant. The company is now seeking strategic and legal advice on the transaction with relevant stakeholders, various ministries and departments who would be advising it on the overall strategy.
The source said SAIL will also be encouraged to take leadership role in development of the steel industry, adopt a more inclusive business model, increase its CSR spends and invest in R&D for indigenous design, engineering and product development for replacement of imports.
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