SAIL, with backing from the Prime Minister's Office, has claimed that the mines are "vital" for its expansion plans and has been strongly pushing for an out-of court settlement on the deadlock with the Jharkhand Government.

"Vigorous efforts are being made with the Jharkhand Government at appropriate levels in the Centre to resolve the matter amicably out of court. The high-powered committee would look at both points of view and is expected to submit its report within three months," a Government official involved in the exercise said.

SAIL and the Jharkhand Government are currently locked in a battle over the Chiria mines in the Jharkhand High Court. SAIL has six mining leases in Chiria and four at Gua in Jharkhand, with an estimate iron ore reserve of around two billion tonnes.

All of these mining leases were originally granted to Indian Iron and Steel Company Ltd (IISCO), and have been in operation for the last five decades.

Of the 10 leases, the renewal of four is under dispute with the Jharkhand Government and the matter at present pending before the Court.
Expansion plans

The steel giant is executing a major expansion and modernisation programmes, entailing an investment of Rs 54,000 crore.

SAIL would need an estimated 5,736 million tonne of ore over the next 50 years, of which 2,710 million tonnes are required for SAIL's brownfield and greenfield plants in Jharkhand itself.

The expansion also covers the Union Territories of Puducherry, Andaman and Nicobar Islands and Lakshadweep. The objective is to increase steel consumption by making it available in rural areas also at competitive prices.

Senior officials of SAIL, including Mr P. Kulshreshtha, Southern Regional Manager (Long Products), and Mr G.P. Srivastava (Flat Products), interacted with district dealers from AP, north Karnataka and Kerala here on Thursday. A similar meeting for dealers from Tamil Nadu, south Karnataka and parts of Kerala was held in Chennai recently.

According to a press release from SAIL, the dealers would work as partners and supplement marketing efforts to reach SAIL steel to rural areas of south India.

The largest domestic steel maker had recently organised a North Eastern District Dealers meet in Guwahati. A similar meet covering district dealers from West Bengal, Bihar, Jharkhand, and Orissa was held some time ago in Kolkata.

In a statement the company said it registered a 6 per cent growth in saleable steel production and an 8 per cent increase in sales during October-December this year as compared to the previous year.

"The increases have been achieved despite the ongoing expansion and modernisation programme that is seeing several production facilities being upgraded," the statement adds.

During the first nine months of 2006-07, SAIL plants operated at an average capacity utilisation of 112 per cent producing 9.328 million tonnes of saleable steel, an increase of 6 per cent over the corresponding period during the previous year. Production of value-added items such as rounds and bars, medium structurals, HR coils and plates recorded a growth of 23 per cent, 15 per cent, 14 per cent and 5 per cent respectively during the period.

The steel plant produced 2.16 MT of hot metal from its Blast Furnaces (BFs), 2.01 MT of crude steel from Steel Melting Shops (SMS), 1.98 MT of saleable steel from the finishing mills and 1.97 MT dispatch of steel during the calendar year.

This represented 108 per cent, 106 per cent and 119 per cent capacity utilisation for the concerned units while on a comparative scale the figures were higher by 27 per cent, 26 per cent and 29 per cent respectively vis-à-vis the performance of 2005.

RSP has concluded the calendar year with a record December output of 3,01,750 tonnes of sinter, 1,93,098 tonnes of hot metal, 1,83,269 tonnes of crude steel, 1,84,806 tonnes of saleable steel and dispatch of 1,88,364 tonnes of steel.

This was by far the best ever December performance by the company since inception.

RSP has also recorded all time high output figures for any April-December period in major areas of production.

While sinter output reached 2.33 million tonnes (MT), hot metal crossed 1.62 MT, crude steel surpassed 1.51 MT, saleable steel touched 1.47 MT and dispatch of steel went past 1.44 MT. This represented growth between 31 per cent and 36 per cent over the April-December period of 2005-06.

Similarly, the capacity utilisation of the concerned units went up in the range of 100 to 117 per cent. During this period the plant achieved all time high performance in the production of finished products like plates from plate mill, hot rolled coils (for sale) and silicon steel.

Besides, RSP has posted best ever figures in techno-economic parameters like coal to hot metal ratio in the BFs, lining life in LD converters in SMS besides specific energy consumption in crude steel production. This has contributed significantly to bringing down production cost and enhancing profitability.

Meanwhile, RSP hopes to repeat this feat of surpassing the annual rated capacity of 2 million tonnes of hot metal, achieved for the first time in a calendar year, during the current fiscal as well. This is in spite of the fact that the coke ovens battery no. 4 has been shut down on December 31, 2006, in compliance to the directives of the Supreme Court.

SAIL, which has recorded profits of Rs 2,800 crore for the first half has identified a gratuity liability of Rs 2,100 crore for over a lakh employees. This is the present value of what the company will have to pay towards gratuity for all employees when they retire. Until now the company paid out gratuity from its profit and loss and had not set aside any fund for gratuity.

Besides the improved financials, companies are also being spurred to provide for retirement funds following the notification of the revised Accounting Standard 16. The new norms require banks to make provisions where there is a defined retirement benefit. Creating a fund also enables the company to save on income tax as contributions made to a fund created to meet gratuity and pension liabilities are eligible for tax breaks.

LIC's group insurance business has improved dramatically in the current financial year on account of a surge in companies outsourcing management of their gratuity funds. The corporation has recorded group business of over Rs 6,000 crore during the first nine months of the current financial year, which is more than what the corporation has generated in the whole of 2005-06. Most of the new group business has come by way of gratuity.

According to sources, SAIL may sell some of its investments to LIC to meet the cash liability. Most of the investment of group plans is in debt instruments, as corporates have been going for traditional policies. The corporation is, however, shortly launching an investment-linked group plan based on ULIP. LIC is expecting a surge in group business on account of the revised accounting standards. A large number of companies and also banks have retirement benefits which are yet to be funded.

The corporation has already invited tenders from IT companies for its first unit-linked superannuation plan. LIC plans to come out with a product where employees can view the balances under their pension account online. The system will also allow employees to issue instructions to switch from growth, balanced and income funds depending on their risk appetite.