You are here: Home » PTI Stories » National » News
Business Standard

SAIL borrowings cross Rs 52,000 cr amid lockdown; inventories level touches 3 mn tonnes '

Topics
Business Finance

Press Trust of India  |  New Delhi 

The slowdown in offtake of products has put'great strain' on SAIL as the steel maker's cash collections have fallen to record lows and borrowings have crossed level of Rs 52,000 crore amid increasing inventory levels, a company official has said.

Amit Sen, Director Finance, Steel Authority of India Ltd (SAIL), has also raised concerned that the borrowings could further go up and has sought management's cooperation to save SAIL from getting "paralysed by lack of liquidity".

In a letter to the company's chairman, Sen said "the slowdown in offtake of our products since beginning of March 2020 has put a great strain on our finances. Cash collections have fallen to record lows, without any let up in expenditures. The result is that the borrowings have crossed Rs 52,000 crore as on date and likely to up. This is an unsustainable situation. Among the many threats that it poses, stoppage of operations, ratings downgrade and debt-trap are the most imminent".

The message has been also conveyed to heads of all plants of SAIL and other key officials.

Sen has also suggested some measures which need to be taken on an urgent basis to conserve cash.

He has suggested that all purchase orders and contracts to be reviewed and delivery period may be deferred and non-essential purchase may be foreclosed.

All high-value purchase orders (PO) and contracts to be re-negotiated, he said and added "If sufficient rebates are not forthcoming such POs and contracts may be considered for closure and fresh tender quickly floated to quickly capture the benefit of reduced prices in the market."

All fresh indents are also to be rigorously reviewed and deferred unless absolutely essential.

He has also pointed out that "allocation of funds from corporate office will be barely sufficient to meet only employee payments and statutory payments. Very little funds will be available for making vendor payments. Therefore, I request you to give special emphasis liquidation of scrap and defectives' inventory lying at plants. The money realised from these sales accrues to the plants and can be used to pay vendor payment liabilities..."


The official also said that inventory level has crossed 2 million tonnes and another about 1 million tonnes is in process. The inventory will increase as production continues while sales are weak.

A large amount is blocked in form of these inventories, he said requesting that further production to be regulated and only those grades which the market is ready to absorb should be produced.

He went up to saying that that cash is lifeline of SAIL and sought Chairman's and cooperation of other officials in making efforts to conserve cash so that "SAIL does not get paralysed by lack of liquidity.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, April 22 2020. 20:06 IST
RECOMMENDED FOR YOU