With debt under control and the prospect of the sector holding bright, public sector major Steel Authority of India (SAIL) is set to embark on the next phase of its capacity expansion programme to increase its crude steel-making capacity to 50 million tonne per annum (mtpa) by 2030 from a little over 19 mtpa now.
The proposed expansion, as per its Vision 2030 document, is in sync with the National Steel Policy, 2017, which envisages the country’s steel-making capacity to reach 300 mtpa by 2030-31.
Higher prices of steel have helped SAIL pare down its debt by Rs 16,222 crore in the first nine months of the current fiscal. At the end of December 2021, the company’s debt stood at Rs 19,128 crore and its debt-equity ratio at 0.42. As of March 2020, SAIL had a debt of Rs 51,481 crore and its debt-equity ratio was at 1.36.
“We are planning the next phase of modernisation and expansion. Our debt-equity ratio of 0.42, as on December 31, 2021, gives us the confidence and the opportunity to embark on the next phase of capacity expansion,” SAIL chairman Soma Mondal said in an interview.
SAIL has a share of around 13% of the domestic finished steel market.
Mondal expects domestic demand for steel to continue to be strong, fuelled by the government’s robust funding plan for the infrastructure sector. The World Steel Association has projected 6.8% steel demand growth for India in 2022.
SAIL has performed well in the first nine months of the current fiscal. During the April-December period, its net profit went up multi-fold to 9,579 crore, compared to 406 crore in the corresponding period last fiscal. Its production of hot metal, crude steel and saleable steel were all the best-ever during the nine-month period of the current fiscal.
Mondal, however, said SAIL’s immediate priorities are raising capacity utilisation, enhancing share of special and value-added steel products in the product basket, improving productivity and techno-economics, and cost optimisation, apart from reducing debt.
On whether the company plans to partner with a foreign firm to produce auto-grade steel, the SAIL chairman said, “Auto-grade steel is a niche area as regards to the domestic steel sector is concerned. The future of the automobile sector is bright and steel producers are exploring options, and so are we. This would certainly be examined during our next phase of expansion.”
Not just SAIL, almost all major domestic steel firms, including Tata Steel, JSW Steel, ArcelorMittal-Nippon Steel India and JSPL, are expanding their capacities in phases. India’s steel-making capacity currently stands at around 144 mtpa and the government expects it to go up to 172.5 mtpa by 2024-25.
The government has launched a production-linked incentive scheme to enhance domestic speciality steel-making capacity to 42 mtpa by 2026-27 from around 18 mtpa now.
from The Financial Express https://bit.ly/3K9bETE
via IFTTT
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