This debt reduction, which started in the second quarter of the financial year (July-September), is expected to gain momentum in the second half (October-March) ahead of the company's capital expenditure and modernization efforts.
As of September 30, 2023, SAIL's net debt stood at about Rs 25,000 crore, down from about Rs 25,500 crore at the end of FY23. The company has managed to reduce its debt by Rs 4,000 crore, which peaked at Rs 29,000 crore in the first quarter (April-June).
According to Anil Tulsiani, SAIL's Chief Financial Officer, the company is targeting debt reduction of Rs 3,500 crore on an annualized basis against capitalization of Rs 5,500 crore earmarked for FY24. While capitalization is expected to intensify post FY25, there could be limitations on debt reduction plans even if capitalization increases significantly.
SAIL's cash flows are expected to remain around Rs 25,000 crore for the next four years, excluding the peak period of modernization expected in FY28. This mega-modernization initiative is expected to add 3.5-4 million tonnes (mt) to the company's capacity.
SAIL's FY24 production and sales targets are estimated at around 19 mt.
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