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SAIL’s debt surged 19 per cent year-on-year to ₹30,500 crore in FY24, driven by higher inventory, lower-than-expected price realisation from railway orders, and rising cost of imported coking coal. In the first two months of the current fiscal year, its debt climbed another 17 per cent to ₹35,000 crore.
Debt stood at ₹25,662 crore in FY23.
In FY21, the state-owned steel-maker’s borrowings were at a high ₹35,350 crore, which it lowered to ₹13,386 crore in FY22. However, the debt inched up from FY23, primarily on account of metal price volatility and rising raw material costs.
During FY24, SAIL’s borrowing stood at ₹29,414 crore at Q1-end (April to June); ₹25,490 crore at the end of Q2; ₹28,127 crore at Q3-end; and shot up by 6 per cent in the last quarter.
According to Praveen Nigam, Executive Director–Finance and Accounts, SAIL was expecting improved realisations with long products witnessing 12-13 per cent price rise between April and May. This would be aided by a softening or stability in coking coal import prices — which are hovering at $239–240 per tonne. Renegotiation of prices with the Railways is underway too.
“All this put together would help pare debt “below ₹30,000 crore levels,” Nigam said.
Infra push
Domestic demand is expected to sustain with rthe government’s thrust on infra; the SAIL management has guided for a 13-14 per cent growth in steel consumption and production in FY25.
The company is targeting crude steel production of over 20 mt and saleable steel at 19 mt for the ongoing fiscal.
“We had over 1.6 million tonnes of inventory beginning FY25, and in these two months it was down by 2.09 lakh tonnes. Borrowings were over ₹30,500 crore and, in this quarter, borrowings increased on account of high inventory, lower realisation,” Nigam said during the post-earningsinvestor call.
“At present (mid-May) our borrowing is to the tune of ₹35,000 crore… coal prices are coming down and we expect them to be softer this fiscal; (incremental) realisation from Railways is expected to increase, and NSR (net sales realisation) will not come down further. So we are hopeful that our borrowings will be below ₹30,000 crore levels for the fiscal,” he said.
In Q4FY24, the long net sales realisation stood at ₹55,400 per tonne and the price of flat steel product was ₹53,700 per tonne. Price of long steel products is expected to be around ₹54,600 per tonne in Q1, while for flats it is ₹53,500 per tonne.
Modernisation plans
SAIL’s modernisation and capacity addition plans, valued at ₹100,000 crore, are set to gain momentum from October. The first phase of tenders for capacity ramp-up at IISCO Burnpur are being considered.
Plans are underway to establish a 4.1-mt greenfield flat steel facility at IISCO, primarily focused on hot rolled coils. Construction of the CRC facility will follow subsequently.
The capital expenditure for FY25 is earmarked at ₹6,300 crore.
Under phase-I, SAIL is seeking board approval for the Rourkela steel plant. Additionally, for the 1 million tonnes per annum TMT facility at Durgapur, the pre-feasibility report has been prepared.
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