SAIL plans major capacity expansion

Steel Authority of India Ltd (SAIL) is embarking on significant capacity enhancement.

The steel major is planning the next leg of expansion post FY24-25, which will take capacity to over 30 million tons (mt) including an incremental capacity of about 13 mt by 2031.

“We have already firmed up some sort of plan for expansion…we will be going in for our expansion plans and most probably we will be initially starting with the modernization, it’s a new expansion at our IISCO Steel Plant, which will be the first one, where we are planning to increase the capacity by 4.5 mt and then staggering the other expansions also, which will take place subsequently to probably go in for a 12 mtto-13-mt expansion by 2030-2031,” Anil Tulsiani, Director, Finance, SAIL, has told analysts.

“Capex should start from the year 2024, 2025, because we’ll have to, firstly, finalize the Draft Project Report and then go in for the tendering process, so the entire process should take almost one and a half to two years,” he added.

Production is also being enhanced through debottlenecking and full capacity utilisation, Tulsiani said.

“There are two things we are doing. One, whatever assets we have now, we are trying to sweat them out. We are doing some debottlenecking schemes and all that. With that, we will try to probably increase the capacity by another 3 mt in the coming 3 to 4 years,” he told analysts following the announcement of third quarter financial results of the company.

“The company is currently functioning at full capacity of 19 mt crude steel production. With de-bottlenecking, SAIL can achieve better crude steel production volumes in 4QFY23. January has been the best month for crude steel production in the company’s history and a similar run rate will continue for Februry/March as well. The company is expected to clock sales volumes of 4.5-4.8 mt in 4QFY23, taking the total sales to 16 mt for FY23,” analysts with Motilal Oswal said in a report issued after the conference call.

Capex strategy

♦ Total capex earmarked for FY23 stands at `5,500 crore of which `3,500 crore is already spent and `6,000 -`7,000 crore for FY24.

♦ SAIL will undertake the debottlenecking exercise and increase the capacity by 3mt in the next 3-4 years.

♦ After the debottlenecking is completed, SAIL is expected to undertake a mega expansion at its IISCO facility and increase its capacity by another 4.5 mt.

♦ SAIL plans to add 12-12.5 mt incremental capacity by 2030-31.

♦ All the capex will start from FY25.

Eyes higher pricing for Railways

While pricing for Railways products has been received for FY21, SAIL has already submitted the request for FY22 at higher rates for about 1.1 mt of products. The benefit of