Undeterred by a slowdown squeeze, public sector Steel Authority of India Ltd is going ahead with its Rs 54,000-crore expansion plans, with no funds problem seen, but the long term is under a cloud.
"All our short term expansion plans are on track and though there is a liquidity crunch around the world we will raise whatever capital required at the appropriate time," said SK Roongta, SAIL’s chairman, told Hindustan Times.
Half of the Rs 54,000 crore needed to ramp up capacity to 26.2 million tonnes from the current 15 million tonnes would be through external borrowings.
The capital will not be raised before the next fiscal year, Roongta said at industry chamber FICCI's executive meeting in Kolkata on Wednesday.
SAIL is cautious on the long term, with prices falling by more than 30 per cent over the past three months and signs of a cycle reversal seen in the industry. That means the company's 2020 target of achieving a target of 60 million tonnes could get affected.
“There is uncertainty in the global-demand supply situation and our two main sectors which demand steel— construction and automobiles — are not doing too well,” Roongta said. "Our medium and long term expansion plans which are not firmed up will have to be re-looked and aligned with the demand situation."
“There has been a price correction and I expect prices to stabilise at current levels for sometime. The overall sentiment is still negative and the capital goods segment is slated to be impacted as well,” Roongta said. “The only solution is if infrastructure picks up again and keeps growing.”