The Steel Authority of India (SAIL), the country’s largest state-owned steel producer, is seeking to increase the provisional price of rails to the Indian Railways for FY 22-23 and FY 23-24 citing higher costs, the company's director (finance) Anil Tulsiani said during a post-earnings call with analysts.
Last year, the railways set the provisional price at Rs 67,500 per tonne, up from Rs 63,624 per tonne set for FY18-19, according to media reports. Under an agreement between SAIL and the railways, these prices are for rail supplies that have an Ultimate tensile Strength (UTS) of 90 kg/mm2 and a weight of 60 kg or 52 kg per meter.
"For FY'23 and continuing on in FY '24, we have been getting a provisional price of Rs 67,500 per tonne, whereas the price finalised for FY '21-'22 is around Rs 85,300 per tonne," Tulsiani said on November 16.
"We will be approaching the railways to give us an ad hoc increase until we submit the cost data of '22-'23 to the CA Cost Office and it is finalised, we will be requesting for an ad hoc increase for '22-'23 as well as '23-'24 since our costs are much more," he said.
SAIL sold about 0.92 million tonnes of rails to the railways during FY22. Earlier this month, the company reported a consolidated net profit of Rs 1,305.59 crore for the September quarter against a loss of Rs 329.36 crore in the same quarter last year.
Tulsiani flagged that the company recorded its highest ever sales in H1 and cited an improvement of Rs 1,750 crores in the turnover, aided by the rail price revision made last year.
Debt reduction plans
SAIL plans to reduce its debt to Rs 22,000 crore by the end of this year, Tulsiani told analysts. The company's debt was pegged at Rs 25,500 crores for the July-September quarter after rising up to almost Rs 29,500 crores in the first quarter.
"A reduction of Rs 3,500 crores with a capex of Rs 5,500 crores during this period is what we are looking at," he added. Asked about capital allocation and debt control while having future expansion plans in the pipeline, Tulsiani said, "we'll be trying to improve utilisation of our existing assets by some minor investments. And then after that, we are going in for the greenfield expansion of the IISCO Steel Plant."
The company plans to phase out expansion plans over the next three to four years and maintain a debt-to-equity ratio of 1:1.
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