Top Indian Steel Mill Aims for Record Output on Infrastructureby
SAIL plans to raise output to 17 million tons next fiscal year
Shares in Mumbai rise to highest in more than one week
India’s biggest steelmaker plans to increase production to a record high to meet expected demand from Prime Minister Narendra Modi’s push to invest in infrastructure.
Steel Authority of India Ltd. is aiming to raise output to 17 million metric tons in the financial year starting April 1 from an estimated 15 million tons this year, Chairman P.K. Singh said in a new year speech to employees on Monday. SAIL is working to boost capacity to 20 million tons, he said.
The capacity buildup by producers such as SAIL and JSW Steel Ltd., India’s second-largest mill, has led to supply outstripping demand in India amid a cash crunch that has tightened spending after the government’s move to ban higher denomination bills. Consumption in India grew 3 percent from a year earlier in the April-November period while output jumped 10.3 percent, according to steel ministry data.
India’s per capita steel consumption this fiscal year is estimated at 60 kilograms a year compared with a global average of 208 kilograms, creating room for expansion and “capacity augmentation rightly matches this opportunity,” Singh said in the speech.
Shares of SAIL rose 2.4 percent to 50.50 rupees in Mumbai on Monday, the highest close since Dec. 21. SAIL is spending 40 billion rupees ($587 million) this year on increasing capacity about 43 percent to 21.4 million tons by 2018, as part of a longer term goal of achieving 50 million tons in the next decade, Singh said in August.
SAIL is banking on higher volumes to boost profitability after it posted six straight quarterly losses. Care Ratings last week changed its outlook on SAIL to negative on subdued profitability expectations given the sharp increase in coking coal prices and the company’s limited ability to pass on the higher costs to customers because of muted demand and high competition.