Within the next year, SAIL will close down five to six stockyards, out of 45 at present. In a second phase, some more would be also closed. Most of the stockyards identified for closure are in central and eastern India.

According to industry experts, the first phase of restructuring would see the distribution getting centralised in Nagpur for both sourcing as well as despatch. This would then be replaced by a service centre.

The first service centre will be through a joint venture with an Australian company, EMAIL, at Faridabad. The venture would have an equity base of Rs 3 crore, which would be shared equally between the two partners. Other such centres are being planned but would take some time, before the company decides on theirlocation.

Presently stockyards are one the biggest loss-making centres for the company and following the dismantling of the freight-equalisation scheme, they no longer serve their purpose.

In a planned economy, keeping goods at stockyards at price differentials adjusted by the JPC put little pressure on the company to reduce inventory. With planned systems, the company kept a certain amount of goods in every region resulting in development of an inefficient distribution system.

The result was development of many stockyrads which employed around 20,000 people all over India. At the same time, labour problems affected delivery schedules.

SAIL's inventory carrying cost would be reduced as a result of the revamp. In 1997-98 the total inventories were Rs 7,589 crore, up from Rs 6,532 crores in 1996-97.

In 1998-99, the company has managed to reduce its inventory by 5.9 lakh tonnes. Analysts say that theoretically this has the potential to come down to zero, if the entire distribution is changed to servicecentres.