CAG Flags ₹12,743 Cr Loss at SAIL Over Poor Inventory, Procurement Gaps

A government audit found that the Steel Authority of India Ltd (SAIL) made ₹12,743 crore of revenue and operational losses in seven years as a result of ineffective procurement and inventory activities.

The Comptroller and Auditor General (CAG), in a performance audit report Inventory Management in SAIL laid before Parliament on Tuesday, stated that the state-owned steelmaker failed to follow stock norms or establish cost benchmarks, leading to overall inefficiencies from its plants in 2016-17 to 2022-23.

Though it held an average of ₹21,698 crore of inventory around 67% of its current assets SAIL lacked a specific benchmark for the cost per tonne of inventory, according to the report.

CAG noted that sudden inadequacies of raw materials such as iron ore, coke, and sinter resulted in the stoppages of production in the blast furnaces at its Rourkela, Bokaro and Durgapur units. The stoppages resulted in losses of 9.32 lakh tonnes of hot metal production, which amounted to revenue losses of ₹1,231.52 crore.

The audit also mentioned consistently high rates of sit-in inventories—6.10% to 8.38% of the total—over an internal standard of a paltry 3%. The value of these spares and sit-in stores climbed from ₹137.40 crore in 2016-17 to ₹212.57 crore in 2022-23, up 55%. Delays in procurement were a point of concern. Approximately 10% of procurement orders violated the stipulated timelines. In one instance, the over procurement of 0.17 million tonnes of coal from Bharat Coking Coal Ltd in the year 2020-21 led to an avoidable outgo of ₹4.65 crore.

Also, SAIL’s excessive dependence on costly imported coal over approved consumption standards has resulted in a cost addition of ₹2,539.68 crore. Excessive use of other vital inputs such as limestone, dolomite, diesel, and furnace oil added another ₹415.85 crore to operational costs.

SAIL is yet to reply to the audit findings.

The report by the CAG raises serious governance and cost-effectiveness issues at India’s largest steelmaker, inviting demands for closer monitoring and structural change.