**SAIL’s Excessive Coal Consumption Leads to ₹2,539.68 Crore Loss**
**Meta Description:** A CAG report reveals SAIL’s overconsumption of imported coal, resulting in significant financial losses and inventory management issues.
**URL Slug:** sail-coal-consumption-loss-report
**Steel Authority of India Ltd Faces Financial Setbacks Due to Coal Mismanagement**
The Steel Authority of India Ltd (SAIL) has been reported to have consumed imported coal beyond the allowed limits from 2016 to 2023, incurring an additional expenditure of ₹2,539.68 crore, according to a recent report by the Comptroller and Auditor General (CAG). The report highlights that SAIL did not establish any benchmarks for inventory carrying costs related to raw materials, semi-finished products, and finished goods, despite maintaining an average inventory of ₹21,698 crore during the period, which accounted for approximately 67% of its current assets.
The CAG’s report, titled ‘Inventory Management in SAIL,’ indicates that the company’s steel plants exceeded the management’s norms for imported coal consumption. The reliance on more expensive imported coal, as opposed to indigenous alternatives, significantly contributed to the financial losses.
Additionally, SAIL struggled to maintain adequate stock levels of essential raw materials such as iron ore, coke, and sinter. This mismanagement led to the blast furnace being temporarily shut down, resulting in a production shortfall of 9.32 lakh tonnes of hot metal and a potential revenue loss of ₹1,231.52 crore across its Rourkela, Bokaro, and Durgapur Steel Plants.
The report also noted that SAIL’s non-moving inventory of stores and spares increased from ₹137.40 crore in 2016-17 to ₹212.57 crore in 2022-23, marking a 55% rise. This excess procurement without proper assessment of requirements has tied up capital in non-moving items.
Moreover, SAIL’s plants took longer than the stipulated six months to process purchase orders in 9.71% of cases during the review period. Despite producing 106.15 million tonnes of saleable steel—89% of the target set in the annual business plan—dispatches fell short, with only 93.75 million tonnes delivered, representing 77% of the orders booked. This discrepancy has led to delays in stock liquidation and increased inventory carrying costs.
In conclusion, the CAG report underscores the need for SAIL to improve its inventory management practices and adhere to coal consumption norms to mitigate financial losses and enhance operational efficiency.
**FAQ**
**What are the main findings of the CAG report on SAIL?**
The CAG report reveals that SAIL exceeded its permitted levels of imported coal consumption, leading to a financial loss of ₹2,539.68 crore, alongside significant inventory management issues.
