The country's largest steelmaker SAIL's borrowings rose to Rs 35,144 crore as on October 2016 hit by declining net sales realisation (NSR) and high coking coal prices, Parliament was informed today.
The state-owned steel giant's interest expenses rose to Rs 2,047 crore in 2015-16 from Rs 1,454 crore during 2014-15, Minister of State for Steel Vishnu Deo Sai said in a written reply to Lok Sabha.
"The borrowings have increased from Rs 29,898 crore as on March 31, 2015, to Rs 35,144 crore as on October 31, 2016," he said.
Due to subdued growth in steel consumption and excessive imports leading to lower prices, the Indian steel industry has been going through a tough time. As a result of the same, the average NSR for SAIL dropped sharply, Sai explained.
The reduction in the realisation of 20.3 per cent during 2015-16 over 2014-15 has impacted profits by Rs 8,392 crore, he said.
After notification of the minimum import price (MIP) and anti-dumping duty by the government, the prices have started moving up to some extent, the minister added.
"However, the price of imported coking coal (which is a prime and essential raw material for production of steel) has started firming up from July 2016 onwards. Drop in NSR, coupled with increased prices of coal, led to cash deficit in operation, which has been met by way of additional borrowings from the market as well as the banking system," Sai said.
He said the government has taken corrective measures, including imposing anti-dumping duties, extending MIP and bringing out quality control orders, to deal with the situation in the domestic steel sector.
In a separate query, Sai said that as on March, 2016, all the scheduled commercial banks have advanced a total sum of Rs 3,13,411 crore to the iron and steel industry sector.
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