Financial Daily from THE HINDU group of publications
Sunday, Jun 30, 2002
RSP is keen on improving marketability of products Interview with Dr Sanak Misra, acting Managing Director
KOLKATA, June 29
AT a time when the parent company, Steel Authority of India Ltd, is struggling to stay out of the BIFR ambit, Dr Sanak Misra, acting Managing Director of the Rourkela Steel Plant (RSP), sits in the hot seat with his unit accounting for much of the losses of the PSU giant. But like Einstein, whose portrait hangs on the wall behind him, Dr Misra has full faith in the power of the human brain, which he thinks will help him turn around the country's oldest public sector steel plant. Excerpts from his conversation with Business Line follow:
What are your priority action areas for turning around RSP?
On taking charge in May 2001, I found a unit where capacity utilisation was low although cost of production was not. The unit was making a loss since 1993 and morale of the 26,000 employees was low. So naturally, I targeted these areas i.e., boosting employee morale, increasing capacity utilisation and improving techno-economic parameters. I was also keen to improve marketability of RSP products.
How did you boost employee morale?
By instilling leadership and spurring on employees in an orchestrated but phased manner. Initially, it was like a one-man fact finding mission. I talked to workers at the shop-floor and then we started organising issue-based workshops, which would often stretch for over six hours. These acted as forum for generating ideas, some of which have been successfully implemented, boosting people's confidence. Concurrently, a mass contact programme has been launched this year where I have addressed, at times an assemblage 300 workers from various plants. I utilised this as a barrier-breaking exercise but I also revealed my plans to turnaround RSP at these interactions.
How do you propose to improve marketability?
At RSP, we have now decided to produce mainly against orders. Saleable products have been identified and we took measures to improve their acceptability while paying attention to packaging. We also told the Central Marketing Organisation of SAIL that while we were doing our utmost, they would also have to help us. In each of the identified product segments, market needs were assessed and production fine-tuned, at times with help of close interaction with SAIL's research wing. As a result, stocks were liquidated from 1.46 lakh tonnes last year to 62,000 now. Last fiscal, RSP increased its sales by 14 per cent in a depressed market.
Tell us about RSP's turnaround plan that was approved by SAIL
On a turnover of Rs 2,407 crore in 2001-02, RSP made a Rs 367-crore operating loss with interest and depreciation contributing another Rs 668 crore. Net loss climbed to Rs 1,036 crore against Rs 445 crore of 2000-01. The increase was primarily due to a 22 per cent decline in prices of flats. Additional expenditure on account of wage revision, VRS and input cost escalation also contributed.
This year's turnover is targeted to be higher (on improved prices) but a Rs 500-crore reduction in net loss is being targeted. We have also sought some cash support from SAIL. We have also launched a dialogue with RMD for improving RSP's raw material linkage while increasing our coal imports to improve quality.
We have also sought a Rs 250-crore support from SAIL for our operations and projects like the upgradation of the ERW pipe project and revamp of the coke oven battery. We will shortly approach SAIL for Rs 100 crore for revamp of the cold rolling mill.
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