In the recent event of the Indian Steel Association on 5 July 2024, Friday, the CMD of Steel Authority of India Ltd. (SAIL), Mr. Amarendu Prakash said that the organization is planning to invest ₹ 6500 crore in this fiscal year 2025. This investment will be a capital expenditure to ramp up the current production capacity of the organization.
He also commented that this investment is a part of their ₹1 trillion investment plan for the upcoming few years to make India a self-reliant hub for all its steel requirements and to control cheap steel imports from China.
This will be the first phase of the overall ₹1 trillion investment plan and the main capex investment will begin from FY2026 as commented by Mr. Prakash. He has also pointed out the regular capex investment that the company has to take care of for maintaining the steel plants and other facilities and for debottlenecking exercises.
The One Trillion Investment Plan
Currently, the annual production capacity of the steel authority is around 20 million tonnes. SAIL is planning to step up this production capacity to 35 million tonnes per year by 2031. This ₹1 trillion investment plan will be executed through the upcoming five to six years to raise production as planned. Mr. Prakash also commented that this will be an ongoing investment and the next phase of it will be for ramping up the production capacity to 50 million tonnes per year.
Earlier Major Investments of SAIL
Talking about Steel Authority of India Ltd.’s earlier investments, the organization informed its investors of another ₹ 1 trillion investment for developing plants for Greenfield and Brownfield expansions. These investments also spanned out for three to four years and SAIL, during the process tried to maintain the debt-equity ratio of 1:1.
Future Prospects of the Steel Industry
Mr. Amarendu Prakash on his idea of prospects of the steel industry commented that while the world’s overall steep market is growing at a pace of only 0.5% per annum, India’s steel industry is growing at 13% per annum as per FY24 and it is expected to grow at 8% CAGR for next 10 years.
The steel demand produced in India can be expected to increase in the coming five years, as India is planning to impose anti-dumping duties on different steel imported from China as per reports. Mr. Prakash also shared his thoughts on this and said that they need to look at both the quality of the steel imported and the prices of the same to chalk down any measures for the future. Since the quality of steel exported from China has been low, many countries have already imposed taxes to control the import of Chinese steel and India supposedly will take similar steps in the near future.
Stock Price Movement
The share price of Steel Authority of India Ltd. has been inching up today and currently gained around 0.5% since the trading session began today post this sail investment news. The sail stock price went up by 25.40% as per YTD and a whopping 73.68% in the past year riding on the excellent growth of the Indian steel market.
Source: https://www.business-standard.com/
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