SAIL raises capex target for FY22 to Rs 8,000 crore

By: |
February 5, 2021 2:15 AM

SAIL had a capex of Rs 970 crore in the third quarter of 2020-21, and in the first nine months of the current fiscal its capex spent was Rs 2,445 crore.

SAILThe company had clocked 3.74 MT sales and 4.31 MT crude steel output during the January-March quarter of the fiscal 2019-20.

Steel Authority of India (SAIL) has increased its capital expenditure target by 67% to Rs 8,000 crore for the 2021-22 fiscal from the revised target of Rs 4,800 crore for 2020-21, Budget documents showed.

In 2020-21, SAIL’s original capex guidance was Rs 4,000 crore, but the state-run firm revised the target upward, presumably on government directive.

SAIL had a capex of Rs 970 crore in the third quarter of 2020-21, and in the first nine months of the current fiscal its capex spent was Rs 2,445 crore. In a recent report, brokerage firm Motilal Oswal said that “the management hinted that capex spending should be lower than Rs 4,000 crore” in the current fiscal. The brokerage firm expects SAIL’s capex spending to remain at Rs 4,000–5,000 crore in FY’22.

During the FY’12-FY’20 period, SAIL has spent Rs 62,000 crore on capex. If it manages to spend Rs 8,000 crore on capex in FY’22, it will be the highest capex spent year after 2013-14. In FY’14, the company’s capex was Rs 9,890 crore. In FY’12, SAIL’s capex was the highest at Rs 11,021 crore and in FY’13, it was Rs 9,731 crore.

Including augmentation of raw material facilities, SAIL had long back embarked on a Rs 72,000-crore expansion and modernisation plan. While various expansions — apparently now at advanced stages of completion — were to take its crude steel-making capacity to 21.4 million tonne per annum (MTPA), SAIL as a whole has 19.51 MT capacity now. The company produced 16.16 MT crude steel in 2019-20.

It is not clear whether SAIL will use the proposed capex to complete its ongoing expansion and modernisation plan or will embark on a fresh round of capacity expansion drive. The government had earlier said SAIL’s steel-making capacity will be raised to 50 MTPA.

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