New Delhi: State-run SAIL (Steel Authority of India Limited) said that its total borrowings have increased by around Rs 500 crore during the first quarter of FY2020-21in the wake of the COVID-19 pandemic. It added that the impact of COVID-19 in the financial results for the March quarter of FY2019-20 was Rs 771.76 crore, on account of fall in the net realisable value of inventory. In a regulatory filing to the stock exchanges on Saturday, SAIL said, "It is difficult to quantify the impact of the pandemic on the operations of SAIL, in view of the uncertainty over the period of slowdown. However, operating the plants at sub-optimal levels, lack of demand for steel in the country and un-remunerative prices, are having an adverse impact on the financials of the company."
The slowdown in sales, and consequently cash realisations, has put a strain on the financial resources of the company, said SAIL. "The realisation from debtors has been low. However, cash conservation efforts initiated during this period have helped in keeping the borrowing levels under control. The total borrowings increased by around Rs 500 crore during the first quarter of FY 2020-21," it added. While stating that the increase in borrowings has been marginal, SAIL said that sufficient lines of credit are available with the company to tap loans from cheaper sources from time to time for repayment and swapping of old loans. The company sees no threats to service debt obligations on time, the document said.
On account of depressed market resulting in production cuts, the profitability has been affected during the lockdown period and its effect will continue for some time, said SAIL.
Though there was shrinkage in demand for steel, the supply of raw materials was not impacted much, except for certain imported spares. Staggered deliveries of bulk raw materials, in sync with requirements, helped in maintaining the inventories at normal levels, said the company.
Though demand for steel has been low since March, SAIL is closely monitoring the situation and adjusting its production based on demand for specific products. With the gradual opening up of the economy, it is expected that there will be an increase in steel demand.
"During the period of lockdown, production at the plants, units was curtailed in view of the depressed demand. Employees were on roster duty. All safety precautions were being observed by the employees at the offices and workplaces to avoid transmission of the pandemic. Sufficient numbers of PPEs are provided at the work places to employees for use," said SAIL
With the opening up of the economy post lockdown, SAIL has raised the production levels in the producing units. Facilities have been properly maintained in a scheduled manner, which is helping in smooth functioning of operations, said the steel PSU.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)