SAIL borrowings cross Rs 52,000 cr amid lockdown; inventories level touches 3 mn tonnes '

New Delhi, Apr 22 () The slowdown in offtake of products has put 'great strain' on SAIL as the steel maker's cash collections have fallen to record lows and borrowings have crossed level of Rs 52,000 crore amid increasing inventory levels, a company official has said.

Amit Sen, Director Finance, Steel Authority of India Ltd (SAIL), has also raised concerned that the borrowings could further go up and has sought management's cooperation to save SAIL from getting "paralysed by lack of liquidity".

In a letter to the company's chairman, Sen said "the slowdown in offtake of our products since beginning of March 2020 has put a great strain on our finances. Cash collections have fallen to record lows, without any let up in expenditures. The result is that the borrowings have crossed Rs 52,000 crore as on date and likely to up. This is an unsustainable situation. Among the many threats that it poses, stoppage of operations, ratings downgrade and debt-trap are the most imminent".

The message has been also conveyed to heads of all plants of SAIL and other key officials. Sen has also suggested some measures which need to be taken on an urgent basis to conserve cash. He has suggested that all purchase orders and contracts to be reviewed and delivery period may be deferred and non-essential purchase may be foreclosed. All high-value purchase orders (PO) and contracts to be re-negotiated, he said and added "If sufficient rebates are not forthcoming such POs and contracts may be considered for closure and fresh tender quickly floated to quickly capture the benefit of reduced prices in the market." All fresh indents are also to be rigorously reviewed and deferred unless absolutely essential. He has also pointed out that "allocation of funds from corporate office will be barely sufficient to meet only employee payments and statutory payments. Very little funds will be available for making vendor payments. Therefore, I request you to give special emphasis liquidation of scrap and defectives' inventory lying at plants. The money realised from these sales accrues to the plants and can be used to pay vendor payment liabilities..."

The official also said that inventory level has crossed 2 million tonnes and another about 1 million tonnes is in process. The inventory will increase as production continues while sales are weak. A large amount is blocked in form of these inventories, he said requesting that further production to be regulated and only those grades which the market is ready to absorb should be produced. He went up to saying that that cash is lifeline of SAIL and sought Chairman's and cooperation of other officials in making efforts to conserve cash so that "SAIL does not get paralysed by lack of liquidity." ABI MKJMKJ