SAIL’s AGGRESSIVE BUSINESS MEASURES TO REDUCE DEBT

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Faced with the challenges of global market environment, the Steel Authority of India Ltd. (SAIL) has adopted an increasingly professional and aggressive approach in managing its business more efficiently in every area of operation. It has left no stone unturned to step up productivity of all critical inputs. An extensive cost-cutting drive is currently underway where every aspect of cost, including capital cost, is under close scrutiny.

Better management of cash and working capital has resulted in SAIL’s debt burden reducing by over Rs. 1,000 crore since April 1, 2000. Restructuring of high interest-bearing loans of about Rs. 4,000 crore has helped the company reduce its borrowings to a level of about Rs. 14,000 crore as on March 31, 2002. This level of debt was achieved despite additional borrowing of Rs. 500 crore in the last two years, to finance the company’s voluntary retirement scheme.

SAIL has effected loan repayment of over Rs. 2,000 crore during 2001-02 and a further Rs. 270 crore in April-June of the current fiscal. Most of this was high-cost debt, incurred to raise resources for modernization of some of the SAIL plants during the mid-1990s, bearing interest rates as high as 17 per cent.