Rs 370 CR transferred to Avon by SAIL in the form of excess discounts
A true White-Collar Corruption using chemical composition of steel as the stealth weapon
Bureaugram’s Take: It was a pre-meditated and duly-calibrated plan.
Such a huge game which SAIL could play with Avon Steel Industries P Ltd, was not possible with any other product or with any other customer due to following reasons:
a) SAIL was largely the sole supplier of Blooms to Avon. Other major steel producers hardly use to interact with Avon as they are not in the business of selling Blooms/semis.
b) The prices offered to Avon were in no way impacting/hurting the business of other major steel producers. Had their business were getting impacted/hurt with exorbitantly low prices of SAIL , then, as done in the past, the steel producers would have approached Ministry of Steel with a complaint against SAIL for spoiling the market by offering low prices.
Avon Steel Industries Private Limited is a Hot Rolled Coils manufacturer located at Ludhiana. It has an installed capacity of 3,00,000 Tonne per annum. The complete plant was imported from Germany. The plant is one of the most modern plants producing high quality Hot Rolled Coils with maximum a width of 520 mm. It produces IS10748 Gr 1 & 2 HR Coils from SWR 14 Grade Blooms of SAIL of sizes 200 x 280 mm, 150 x 300 mm, 150 x 350 mm & others with some size variations. The HR Coils are in turn used by Avon to manufacture pipes.
On Sep 05, 2025, ‘thewire.in’ had published a detailed article on the “SAIL Bloom Scam” in cahoots with Avon Steel Industries Private Limited. Link of the article is given below.
We at ‘bureaugram.com’ have taken the issue further and explored new facts in the matter.
Chemical composition of IS10748 Gr 1 & 2 is exactly equal to SAIL’s SWR14 Grade
IS10748 is the standard which covers requirements for weldable quality hot-rolled carbon steel strip in coils intended for the manufacture of welded steel tubes and pipes. The chemical composition taken in conjunction with the permissible variation as mentioned in the IS10748 standard is exactly equal to the chemical composition of SAIL’s SWR 14 Grade.
It may be noted that SWR14 is the name given to the Avon’s grade, internally by SAIL.
In addition to supplying over 2.6 lakh tonne of SWR 14 Grade Blooms of SAIL in sizes 200 x 280 mm, 150 x 300 mm, 150 x 350 mm & others with some size variations to Avon Steel Industries Private Limited, Munish Ahuja also sold about 25,000 Tonne to three firms at Durgapur. This resulted in an additional loss of about Rs 20 CR to SAIL, taking the total loss to Rs 390 CR.
Fact Check on SAIL Claims
Claim 1: Semis can be used to manufacture products like TMT Bars, Structurals, Wire Rods, H R Coils etc.
Fact: SWR 14 Grade Blooms of SAIL of sizes 200 x 280 mm, 150 x 300 mm, 150 x 350 mm & others with some size variations can only be used to manufacture H R Coils that too conforming to IS10748 Gr 1 & 2 only. No other product or grade can be manufactured from in above sizes of SWR 14 Grade Blooms. For TMT Bars & Structurals Carbon requirement is 0.17 to 0.23%. For Wire Rods square booms/billets are required in sizes 100 to 165 mm.
Claim 2: Semis are Long Product and hence its pricing is governed by Long Product market dynamics.
Fact: As per Joint Plant Committee, Ministry of Steel, semis are neither Long Product nor Flat Product. The concept of Long & Flat is limited to Finished Products only.
Claim 3: End use/Segment is not a consideration in deciding selling price
Fact: There is a well-established practice of charging differential pricing for different segments and different specifications of the same product. In this regard reference is drawn to Marketing Serial No. 31 of 2007 dated 01.09.2007 of SAIL on Administration of Rebates.
Claim 4: CMD & Director(s) is an administrative post away from day-to-day operations
Fact: It was the prime responsibility of the Revenue Maximization Team (RMT) of SAIL to fix the selling prices of the SWR14 Grade Blooms based on the market conditions and end product.
Fact: Moreover, Hot Rolled Coils are also manufactured by SAIL in its plants at Bokaro and Rourkela and its price is also fixed simultaneously by the same RMT.
Fact: Out of the total supply period of 20 months in the complaint, during the first four months Soma Mondal was Director (Commercial) & during the next 12 months she was holding charge of Director (Commercial).
Fact: Director (Commercial) along with all other functional directors except Director (Personnel) & CMD are members of RMT. Entire RMT is responsible for fixing exorbitantly low prices for SWR14 Grade Blooms but Director (Commercial), being head of Sales & Marketing, owes the maximum liability if the team fails in its job of fixing the right prices.
Some claim that apart from non-steel background, Soma’s lack of business acumen and absence of administrative capabilities are responsible for ongoing SAIL’s corruption fiasco whereas there are others who do not buy this argument saying that her 6 year tenure in SAIL spanning from Mar 2017 to Apr 2023, was large enough to understand the "nitty-gritty" of the steel business, particularly when she was at the senior most position with a battery of officers at her command. Moreover, if she could not manage the job for which she was appointed on contract by the Government, morality and honesty demands that she must have ended the contract rather than playing with public money.
Claim 5: Same price has been charged to all the customers. No favour has been given to Avon.
Fact: Almost entire production of SWR 14 Grade Blooms goes to Avon, RMT was aware that if they fix exorbitantly low prices for Blooms, it will benefit only Avon. Additionally, it may be noted that SWR 14 Grade Blooms in sizes do not have any internal consumption in SAIL plants. This grade of Bloom is produced only and only for Avon.
Knowing fully well that above mentioned sizes of Blooms in SWR14 Grade Blooms have no in-house usage, plant officials produced these Blooms. After producing, the sales and marketing team was pressurized to arrange for evacuation of material from plants on the pretext of hampering operations.
Claim 6: Lack of knowledge
Fact: V Suresh and M K Agrawal were respectively Regional Manager and Regional Business Manager (LP) of Northern Region and played an active role in selling semis to the firm at exorbitantly low prices. Since in their earlier avatars, they both were Branch Managers of Ludhiana, they were fully aware of the business dynamics of AVON.
Fact: On 29.03.2014, SAIL formulated a policy vide Marketing Serial No. 14 of 2014 for conversion of slabs(semis) into HR Coils / Plates / Narrow Width HR Coils. SAIL through open tender entered into a contract with M/s Avon Steel Industries P Ltd (then called Avon Ispat & Power Ltd) for conversion of slabs(semis) into Narrow-width HR Coils with conversion rate of about Rs 1600 per tonne. Slabs when cut along the length, take the shape of Blooms and the same is done by Avon. Therefore, when Blooms are directly used, it saves cutting & burning loss which is estimated to be Rs 800 per tonne.
Fact: Approving authority for Preparation of estimate, Evaluation of Price Bid, and final recommendation on award of contract was RM(FP)/ICWF of the respective region. M C Agrawal was the RM(FP) of the Northern Region at this time.
Fact: Over 4,000 Tonne of HR Coils were got converted from Avon and sold by SAIL to the pipe/tube makers.
Fact: Till Oct 2014, SAIL was manufacturing/selling its own Narrow-width HR Coils under the product name called “SKELP” at its Durgapur Steel Plant.
Fact: SAIL also produces ERW pipes at its Rourkela Steel Plant from its own HR Coils.
Fact: M C Agarwal, V S Chakravarty, Sanjay Agrawal, Gautam Ghosh, Atul Mathur, V Suresh, Jacob Chako, Abhijeet Kumar. M K Agarwal, D S Thukral, Munish Ahuja among others, being old hands at CMO/SAIL all having CMO experience ranging from 25 to 30 years, were fully aware. Moreover, many of them hold engineering degree in Metallurgy.
Claim 7: Whistle Blower estimated the loss to SAIL as Rs 231 CR
Fact: CVO SAIL in its preliminary report estimated the maximum loss as Rs 370 CR.
Claim 8: Soma: My name is not there in the list of officers submitted by SAIL Vigilance to the Ministry along with the preliminary report, which later formed the basis of suspension of 29 officers.
Fact: It has been gathered that the notes/minutes of the monthly RMT meeting and the market feedback submitted by Executive Director(Marketing) and Executive Director(Sales & ITD) to Director(Commercial) were not shown by the SAIL management to CVO-SAIL during preparation of the preliminary investigation report.
Claim 9: Product manufactured by Avon is ‘Patra’, not HR Coil.
Fact: On is website Avon mentions its product as HR Coil conforming to IS10748. It may please ne noted that ‘Patra’ is a local product, generally does not come in coil form and does not confirm to IS10748.
Claim 10: CMD SAIL Amerandu Prakash in his letter dated July 31, 2023 writes that Avon had the option to using inputs other than Blooms like slabs/ingots etc.
Fact: Blooms are the most ideal input for the mill. Yes, slabs can be used but they require additional operations of cutting and grinding, therefore involves extra costs and loss of productivity. (see facts against Claim 6 above) Moreover, availability of slabs for sale is hardly there in India. Even is intermittent availability is there due to some glitch in the plant, no producer is inclined to sell slabs as their end-product competes with their own finished product. At times SAIL also has slab accumulation at Bokaro but their sales are generally avoided at least in the domestic market.
Similarly, except for SAIL, availability of Blooms for sale in sizes and chemistry, is not there in the country which can take care of the requirement of mammoth 3,00,000 T mill. Had the Medium Structural Mill and Universal Section Mill of Durgapur Steel Plant and IISCO Steel Plant been run on their rated capacity, SAIL would also not had Blooms for sale to Avon. It takes us to a larger question, why these mills are not running to capacity. Is the rated rapacity of the two mills only on paper and they will never reach the rated capacity? Was the rated capacity deliberately manipulated at the project approval stage to get higher capacity Bloom Casters so that Avon can be fed eternally. The procurement data of Avon mentioned by CMD SAIL data given by CMD SAIL Amerandu Prakash in his letter dated July 31, 2023 confirm the same as about 90% to the total procurement of Avon consists of SAIL Blooms.
If the input material was so freely available in the market, then why Avon put all the eggs in one basket?
Bureaugram’s Take
It was a calculated plan. Such a huge game which SAIL could play with Avon Steel Industries P Ltd, was not possible with any other product or with any other customer due to following reasons:
a) SAIL was largely the sole supplier of Blooms to Avon. Other major steel producers hardly use to interact with Avon as they are not in the business of selling Blooms/semis.
b) The prices offered to Avon were in no way impacting/hurting the business of other major steel producers. Had their business were getting impacted/hurt with exorbitantly low prices of SAIL , then, as done in the past, the steel producers would have approached Ministry of Steel with a complaint against SAIL for spoiling the market by offering low prices.
Source
: JPC report published every month. (JPC is Joint Plant Committee under
Ministry of Steel)
From CMD SAIL Amerandu Prakash’s letter dated July 31, 2023 written to Ministry of Steel
(The above article has been written based on extensive research and inputs from various sources including sources from SAIL and steel experts. It is not only a news article but a document meant for knowledge and education of sales and marketing officers of SAIL and other steel companies)
