Steel Authority of India Ltd (SAIL) aims to bring down its borrowing to Rs 20,000 crore by the end of this fiscal taking advantage of a robust margin.
Soma Mondal, chairman of SAIL, said the PSU had brought down borrowing by around Rs 5,000 crore in the first quarter itself and the plan is to reduce it to Rs 20,000 crore depending on the market conditions. During 2020-21, SAIL had cut net debt by Rs 16,131 crore to Rs 35,350 crore.
In aggressively reducing the debt overhang, SAIL joins top private sector steel majors such as Tata Steel and Jindal Steel & Power Ltd in deleveraging its balance sheet during the commodity upcycle.
Speaking on the sidelines of an event to inaugurate the new headquarters of MSTC Ltd in Calcutta, Mondal said the PSU has a capital expenditure plan of
Rs 8,000 crore this fiscal.
Commenting on the domestic demand, which has moderated during the second wave of Covid-19, Mondal said there appeared to be a pick-up. “Flat products are stable and long products are showing indications of an increase.” she said.
The MSTC office was inaugurated by Union steel minister Ram Chandra Prasad Singh. When asked if the government or SAIL would reconsider the decision to dismantle the raw material division of SAIL from Calcutta, the minister said the process was complete. “There is no scope for a rethink now,” Singh said.
Market forces
The government is unlikely to intervene in reining in steel prices even as some of the user industries in the MSME sector have been complaining about the high prices. While prices have come off from the record highs, they are still at elevated levels.
“It is a cyclical industry. Covid had impacted supply even in the international market, which led to the increase in prices. We are focusing on increasing capacity, which should enhance supply and bring down prices,” said Singh.
However, he pointed out that international prices were still 15-20 per cent higher than the domestic rates.
He also did not offer to intervene in the export of iron ore and pellets which has created a shortage in the domestic market, spiking prices. “We are keeping a watch. But prices have started coming off now,” he said.
