ASP, which was a profit-making plant located at Durgapur in West Bengal, has been incurring losses for the last few years and is facing a negative networth.

At the initiative of SAIL chairman Arvind Pande, ASP is getting 50 tonnes of hot metal every day since May 15 from the neighbouring Durgapur Steel Plant (DSP), which is expected to lead to substantial cost savings for the unit. Prior to this arrangement, ASP used melt scrap to make steel, but the process consumed more electricity.

Sources said that with better prospects of higher steel production at lower cost, ASP is now concentrating on higher sales. It is aiming at a 28 per cent increase in sales which exclude inter-plant transfers. Against sales of 88,402 tonnes in 1998-99, it hasplans to sell 1,14,000 tonnes in 1999-2000.

It is believed that once the target of higher net sales realisation is achieved, ASP would be able to turn around and record operational profits or positive gross margin.

The other steps ASP is planning are improvement in techno-economic parameters like higher yield from conversion of liquid metal to saleable steel and substantial reduction of manpower. In 1998, the plant reduced its manpower by 650 to around 5,500. This time it hopes to reduce it further by 1,500.

These and other measures, it is hoped, will transform ASP into a viable unit. Once the unit survives without cash support from SAIL, it may turn its focus on development, a senior SAIL official said.

ASP's troubles started when the global prices of stainless steel fell by around Rs 8,000 per tonne over a period of time. The unit had to quit the stainless steel market.

Even Salem Steel Plant of SAIL, which uses much cheaper imported slabs, failed to make profits. This has led to the generalbelief that the future of ASP lies in the special steels sector and, accordingly the unit has gradually to diversify its products.

Earlier, in a bid to bail out ASP, SAIL planned to merge the unit with DSP. However, the move had to be postponed in the face of strong objections raised by ASP employees who feared a merger would wipe out ASP's identity. Many SAIL officials still believe merger would be a better option than closure.

The other options are sale of ASP to a private party or developing it in the joint sector. But saddled as it is with huge operational losses, ASP does not seem to be a good proposition at present. It may come in the reckoning once it turns around and posts operational profits.

Incidentally, SSP's excellent plant facilities and commendable work culture have already attracted buyers from both India and abroad and SAIL has asked commercial bankers to hold talks with them.

Recently the SAIL chairman made it clear that the company would concentrate on its four major integratedsteel plants at Bhilai, Bokaro, Durgapur and Rourkela. This would mean that secondary units like ASP, SSP, Indian Iron & Steel Co and the newly acquired Bhadravathi-based Visvesvaraya Steel Plant would be left to fend for themselves.