Age: 49 years

Qualifications: The single largest steel-maker in the country despite market share having whittled down to 30 per cent from 60 per cent in seven years

Expectations: A one-shot monetary support from the principal shareholder to tide over a bad year, with a mandate to shed flab to be able to tide over all other bad years.

Potentials: Tremendous, says chairman Arvind Pande

The SAIL chief, expected to be instrumental in the most dramatic metamorphoses of a Command Economy relic into a free-market fantasy, reposes faith in a company that is poised to shortly announce a whopping loss of nearly Rs 1,300 crore, its first in 12 years. The losses this year will equal to SAIL's net profit a couple of years ago.

Last year, the public sector conglomerate of five integrated steel plants had earned a measly net profit of Rs 132.99 crore, out of a sales turnover of Rs 14,624.07 crore. The year before SAIL had earned a net profit that was nearly double atRs 588.03 crore. The year before that, in 1995-96 the company had notched a net gain of Rs 1318.61 crore, or twice what it was about to earn the following year.

During the steady decline in profitability, SAIL's sales turnover hovered around the same level of Rs 14,000 crore-plus in real terms. The nearly static turnover and the progressive jump in steel sales (7.6 per cent last year) lends credence to SAIL chairman Arvind Pande's contentions that the company's profitability had been a prey to soaring input costs, a bad market and mounting debt (of Rs 20,000 crore) for capital investments.

The reasons notwithstanding, Pande admits that if the navratna "remains where it is", it was poised to turn sick in the coming five years. The rot could only be stemmed surgically, by hiving off loss-making and non-core businesses, parting with excess manpower and some doses of monetary grants (Rs 4,550 crore write-off of loans from the Steel Development Fund and Rs 1500 crore for employee separation schemes) orguarantees for loans.

Even as the SAIL restructuring proposal awaits a nod from the Union Cabinet, the man at the helm of the sinking ship says, "We have been as efficient as anybody else. When we ask for government help, it is not charity."Excerpts from a conversation with Madhumita ChakrabortyThere is some good news for SAIL at last. The finance minister has already indicated his approval for your restructuring proposal.

Arvind Pande: We have a financial package which the government should clear. Pandit Nehru called us temples of India and we had to take on social responsibilities. Then in 1991 the reforms process began, but we are still being asked to support loss-making units. Ever since the tariff levels were brought down, we have to compete with international suppliers as well as the private sector.

Internationally, there is an over-supply, there is a lot of steel and we have to compete. Traditionally the margins on steel sales are low, so we can only compete if we cut costs.

You have someproblems typical of the public sector...

Comments are made that we have inefficiently used money made available to us, have incurred cost overrun and time overrun. Well, you have the example of the private sector capital investments and their time overrun and cost overrun. The IDBI is today asking them those questions.

You give us the same freedom (as the private sector), let us reduce our manpower, get rid of unviable units and I am quite confident that we can compete with any of these people and even with international suppliers. We have contemporary technology, we have the skills.

The IDBI has asked these companies to get rid of their unviable businesses.

The Tatas have sold their cement plant this year and last year they had sold their power plant...When we want to do this, the government says, ``no, you have a larger accountability.'' We are saying fine, if you can't do this, cover up the extra costs. The cost of extra manning is Rs 1,200 crore a year. We did our own internal studies. If we donot streamline, we will head for losses in the coming years.

Even if you do get your financial package, which includes finding a joint venture partner for your power plant and hiving off two fertiliser plants, how long will it take SAIL to turn round the corner ?

Even if the economy picks up (resulting in a pick-up in the demand for steel)...even by the most optimistic assumption, it will take us four to five years to get out of this (morass of low margins and high costs.) The good part of the story is that there are things we can do and if we can do them, in another four to five years we will be the lowest cost producer of steel. In fact, I had told the Finance Minister, `why don't you make this an example of successful restructuring ?' Today we do not have a single example of successful privatisation. All this political opposition to privatisation is because people don't know what privatisation means...

The Disinvestment Commission did recommend that an organisational and financial revamp be madebefore the Union government attempts to dilute its 85.82 per cent shareholding in SAIL. Is the financial and business restructuring a prelude to offloading of government equity ? Not as part of our restructuring package, let me make it clear. That is a decision the majority shareholder will have to take, but many people in government are talking of disinvestment.

McKinsey (which was SAIL's consultant for the restructuring proposal) has examined the issue of whether we should restructure first and privatise later...If we restructure first, the government will get a better value for its shares. Our share price now is Rs 5, it should be at least Rs 30 (per scrip.) We have Rs 8000 crore of reserves.

You have a workforce of 1,70,000 and the right size is reportedly one lakh people. Of course you have another Voluntary Retirement Scheme (VRS) and the sabbatical. But even so, how can you part with so many people? We can do it in a humane way. We have to discuss with our employees, officers and trade unions.There are some trade unions like the CITU and the INTUC, who will not completely agree. It will take them time to understand the implications.