"Despite our best efforts, the plant continues to function at around 80 per cent capacity. Although the plant has been operating at the best ever levels for the past four years, full capacity utilisation has been eluding it," a senior DSP official told The Financial Express.

Till October 31, 1999 or in first seven months of the current fiscal, it produced 7,47,000 tonnes of saleable steel, which is 2.9 per cent higher than the corresponding period of the previous fiscal. Crude steel and hot metal production during the period was 8,05,000 tonnes and 9,34,000 tonnes respectively.

"We are losing out in our efforts at full capacity utilisation with a combination of internal and external factors. Internally we had problems with the blast furnaces and externally we are affected by weather as well as coalsupplies," the official said.

The plant lost production for around five days in September because of heavy rains. Then, coal supplies were disrupted because of the extended festival season from Durga Puja to Chhat. As a result, coal stocks at DSP are at critical levels.

The poor quality of coking coal is also affecting DSP, which uses a 40:60 mix of imported and domestic coal. Poor coal quality affects production of hot metal.

DSP's production from modernised blast furnace No 4 has picked up after some repairs and it is now operating at the rated capacity of around 2,200 tonnes of hot metal daily. The furnace, which was commissioned in April 1996, has produced 2.3 million tonnes (mt) of hot metal and was due for repairs.Repairs on blast furnace No 2 have been deferred till early next fiscal. This furnace, commissioned in December 1993, has produced 3.2mt hot metal till now and was due for repairs this year.

The continuous casters have come up extremely well and are at present operating at 95 per centof their rated capacity, the official said.DSP's products, except structurals and to some extent semis, have been moving in the markets, but price realisations have been rather depressed despite the fact it could despatch 65 per cent of its products direct to customers.

Last year, DSP saved Rs 125 crore by controlling costs. Many in the steel plant, which is saddled with Rs 650-crore interest and depreciation burden and restricted market realisations, believe that DSP's future depends on extensive cost control.

This could be achieved through better process controls and lower consumption of raw materials, spares etc, lower purchase costs, major cuts in infructuous expenditure for social amenities and hiving off or closing down non-core activities and unviable shops.