SAIL repays Rs 960 crore debt in Q1

Steel Authority of India Ltd (SAIL) has repaid Rs 960 crore of its debt in the first quarter ended June 30, 2004. The company plans to reduce its overall debt burden by another Rs 2,000 crore in the current financial year.

V S Jain, chairman, SAIL, said, "We have already paid back around Rs 960 crore in the first quarter and are looking at reducing our total debt by another Rs 2,000 crore during this year."

SAIL had an outstanding debt amounting to around Rs 8,600 crore as on March 31, 2004.

The company, which had registered a debt-equity ratio of 1.8:1 as on March 31, 2004, is looking at bringing down the ratio to around 1:1. The company's current debt-equity ratio stands at 1.3:1. "We want to maintain a debt-equity ratio of 1:1," Jain said.

SAIL had repaid Rs 4,500 crore of its debt in 2003-04, bringing its debt-equity ratio down from 6.5 to around 2.4.

"Better price realisations over the year has augmented our debt repayment process and this is likely to continue for some time to come," Jain said.

SAIL has recently announced a Rs 25,000 crore capacity expansion plan. The company proposes to increase its capacity to 20 million tonne per annum by 2012. The expansion will mainly be funded through internal accruals, along with borrowings from the market, Jain said.

"We would borrow whatever additional funds we require from the market for the second phase, but the first phase of the expansion project will be funded through internal cash generation," he added.