SAIL Overspent Rs 25.4 Billion on Excess Coal Imports

01 Aug 2025 CW Team

Steel Authority of India Ltd (SAIL) exceeded permissible levels of imported coal usage between 2016 and 2023, incurring an additional expenditure of Rs 25.4 billion, according to a report by the Comptroller and Auditor General (CAG) of India.

The performance audit titled Inventory Management in SAIL revealed that SAIL's steel plants consumed imported coal beyond the internal norms set by management. The higher reliance on costlier imported coal, instead of domestic alternatives, significantly inflated the company’s expenditure.

The report, tabled in Parliament, also noted that SAIL did not set benchmarks for inventory carrying costs per tonne of raw materials, semi-finished, and finished goods, despite holding an average inventory of Rs 216.98 billion during 2016–17 to 2022–23—about 67 per cent of its current assets.

Further, due to poor stock maintenance of key raw materials like iron ore, coke, and sinter, blast furnaces at Rourkela, Bokaro, and Durgapur were forced into downtime, leading to a production loss of 932,000 tonnes of hot metal and a missed revenue opportunity of Rs 12.32 billion.

Non-moving inventory of stores and spares also rose sharply—from Rs 1.37 billion in 2016–17 to Rs 2.13 billion in 2022–23—an increase of 55 per cent, largely due to excess procurement without demand assessment. The report also found that in nearly 10 per cent of cases, the time taken from raising an indent to issuing a purchase order exceeded the six-month benchmark.

Of the targeted 119.66 million tonnes of saleable steel under the annual business plan (2016–2023), five integrated SAIL plants produced only 106.15 million tonnes—89 per cent of the target. Capacity utilisation during this period ranged from 77 per cent to 89 per cent.

Despite booking orders for 121.86 million tonnes, the despatches stood at only 93.75 million tonnes—77 per cent of the orders—leading to delays in stock clearance and increased inventory carrying costs at plant level.

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