SAIL to double capacity to 50 mn tonnes by 2030, starts land bank study

The last phase of expansion by SAIL entailed raising capacity from 12.8 mt to 21.4 mt. But the plan, conceived in 2006-2007, was delayed due to the 2008 global financial crisis

Public sector steel major, Steel Authority of India Limited (SAIL), is looking to more than double capacity to 50 million tonnes (mt) by 2030.

In a letter to shareholders, Soma Mondal, chairman, SAIL, said, “In line with the National Steel Policy 2017, your company has formulated its Vision 2030, whereby it is envisaged to enhance the crude steel capacity to 50 mt.”

She also mentioned that the company has started working on the land bank study for the next phase of expansion. The message to shareholders was part of the annual report for 2020-2021.

The last phase of expansion undertaken by SAIL entailed increasing capacity from 12.8 mt to 21.4 mt. However, the expansion conceived in 2006-2007, was delayed due to the global financial crisis in 2008.

The latest annual report mentioned that the modernisation and expansion plan (MEP) at Rourkela, Burnpur, Durgapur, Bokaro and Salem Steel Plants and all major facilities under Bhilai Steel Plant have been completed.

The various facilities are under operation, stabilisation and ramp-up. “The revised cost estimates (RCE) of MEP of all the plants have been approved progressively by the year 2020-21. Considering these RCEs, the indicative investment for MEP is likely to be Rs 80,170 crore (gross) (excluding the sustenance schemes). The cumulative expenditure of Rs 68,267 crore (gross) has been incurred till March, 2021 on MEP (excluding sustenance schemes),” the annual report mentioned.

However, taking advantage of booming steel prices, SAIL has pared debt significantly.

Mondal told shareholders that the highlight of the financial performance without a shadow of doubt was reduction in the leverage position.

The company reduced debt from Rs 51,481 crore as on March 31, 2020, to Rs 35,350 crore as on March 31, 2021.

“Consequently, the debt-equity for the company improved to 0.87 as against 1.36 as on previous year end,” she said.

SAIL also recorded one of its best financial performances. The company achieved its highest ever annual sales turnover of Rs 68,452 crore during FY21, a growth of more than 12 per cent over previous year. Annual EBITDA or gross margin at Rs 13,740 crore was also the highest ever.

Most of the major steel producers posted recorded performances in FY21 on the back of rising steel prices. Companies also used the current cycle to deleverage.

Earlier this month, ICRA in its steel sector outlook mentioned that the industry’s consolidated debt levels declined to Rs 2 trillion in end-July 2021, from Rs 2.6 trillion in end-July 2020. The industry’s consolidated borrowings today are at its lowest levels since March 2012, the report mentioned.

THE ROAD AHEAD

• Plans to increase crude steel capacity to 50 mt as part of Vision 2030

• Working on land bank study for next phase of expansion

• Last phase of expansion entailed increasing capacity from 12.8 mt to 21.4 mt