SAIL aims to bring down borrowings to Rs 20,000 crore

Public sector steel major, Steel Authority of India Ltd (SAIL), is looking at bringing down its borrowings to Rs 20,000 crore by the end of the current financial year.

Soma Mondal, chairman SAIL, said that by year-end the aim is to reduce total borrowings at a level of Rs 20,000 crore depending on steel prices and demand situation. She was speaking on the sidelines of an event to mark the inauguration of MSTC’s corporate office building in Kolkata.

At the end of the first quarter of the financial year, SAIL had said that it had reduced Rs 5,063 crore of gross borrowings during the quarter. During FY21, net debt had decreased by Rs 16,131 crore to Rs 35,350 crore (as on December 31, 2020).

Booming steel prices, especially in the second half of last year, had led private and public sector companies to deleverage. However, the second Covid-wave dampened domestic demand over the past few months.

Mondal said that domestic demand is picking up and the price trend is stable. “Flat products are stable and long product is showing indication of an increase.” she said, adding that post-Covid, construction activities had picked up.

For the year, SAIL’s capex is pegged at Rs 8,000 crore.

Earlier, during a media interaction, Union steel minister, Ram Chandra Prasad Singh, said that there was no scope for a rethink on the dissolution of the raw materials division (RMD) headquarters of SAIL from Kolkata, as the process was complete.

“Once a process is complete, there is no scope for a rethink,” he said. The minister was in Kolkata to inaugurate the new corporate office of MSTC.

Steel price

Steel prices, though, have come off their highs now, but were surging since November last year. User industries, especially MSMEs, had raised concerns around rising steel prices.

The minister said that steel is a deregulated sector and about 86 per cent of production was accounted for by the private sector.

“It is a cyclical industry. Covid had impacted supply even in the international market, which led to the increase in prices,” said Singh.

However, he pointed out that international prices were still 15-20 per cent higher than domestic prices.

Responding to a question on what kind of cost overrun higher steel prices had led to in government projects, the minister said that in some it was 8 per cent and in some, 9 per cent.

On the MSME sector, he said that it was one of the largest employers. “There are many government schemes to support the sector. We are supporting them and will continue to do so.”