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PSU steel major SAIL has initiated the process of carrying out ₹100,000-crore expansion and modernisation plan to raise capacity to 35 million tonnes per annum by 2030-31.
The steel maker’s current capacity (crude steel) stands at around 20 mtpa and capacity utilisation is at 95 per cent.
The board has already approved a greenfield expansion plan for IISCO Steel Plant in West Bengal to hike capacity to 4 mtpa.
Sources say the mill will produce higher grade hot rolled coil (HRC) and API (American Petroleum Institute) grade steel products for the oil and gas sector and steel for making automotive components. The new mill is expected to be completed in about four years. IISCO’s current capacity is 2.6 mtpa of crude steel per year, converting 85 per cent of it to rebar, wire rods and heavy structural products.
Other Projects
According to Praveen Nigam, Executive Director (Finance and Accounts), SAIL, for expansion at Bokaro steel plant, the pre-feasability report studies (PFR) have been completed, and a consultant has been appointed for preparation of DPR.
Processes for brownfield expansion and modernisation at the Durgapur Steel Plant in West Bengal have been initiated and plans submitted in October.
While a product mix is under-discussion, sources say there will be a new TMT mill of 1.4 mtpa coming up as part of the expansion plan. The board approval has been sought for the same. He, however, did not give the timeline by when project would be completed.
“For next fiscal the capex is at ₹6,000 crore…. But over the next three years you may not see any significant capacity addition. Various expansion and modernisation projects are in different stages of approvals,” he said during a post-earnings call.
Debt reduction
Nigam said plans are afoot to bring down debt from the current ₹30,000 crorel, but there may not be significant reduction immediately.
In absolute terms, debt was at ₹28,000 crore in December and increased to ₹29,000 crore last month.
The management had previously given a guidance for paring debt by 10-12 per cent or at ₹23,000-crore levels by this fiscal-end. However, lower realisation, with steel prices turning volatile and coking coal prices (imported) going up, led to an increase in debt during October– December.
“We would look to bring down the debt over February and March,” he said adding “there may not be any significant reduction over the next two-odd months”. SAIL expects improved realisations through Q4 (January – March), faster liquidation of existing stocks, apart from stability in coking coal import costs.
Part of the volatility in coking coal import prices would be resolved when its Tasra coal mines become operational sometime next fiscal. The mines are expected to have a capacity of 1.4 mtpa.
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