Chaudhary said that steps taken by the government, such as the renunciation of fixed-demand charges by the power company, have come handy for SAIL in the present trying times.
As domestic sales dried up in view of the lock-up to contain the Covid-19 pandemic, the state-owned steelmaker SAIL is facing cash flow problems as the inventory piled to 2 million tons on Thursday.
“Yes, certainly cash flow is a problem as there are no sales in the domestic market and we are depending only on the cash flow which we are getting from our debtors,” SAIL chairman Anil Kumar Chaudhary told a news channel.
Chaudhary, however, exuded the confidence of the pick-up in demand once the lock-down had been lifted. Although sectors such as automotive and engineering may take time to recover, he said, in the short term, he remained buoyant in the construction and infrastructure sector, which would take care of its inventories.
“There is no outlet in the market, particularly in the domestic market, and when the production is going on, may be at a 50% level, some inventory has to happen.
Today, as of yesterday, we 're sitting on an inventory of nearly 2 million tonnes. As far as (training) working capital is concerned, I think that for every company, cash flows are in difficulty. Our fixed cost is about Rs 1,500 crore per month, "he said.
Chaudhary said that steps taken by the government, such as the renunciation of fixed-demand charges by the power company, have come handy for SAIL in the present trying times.
In response to the liquidity crunch, in a written message addressed to employees on 16 April, Chaudhary asked them to review any forward-looking expenses and retain cash, follow-up rigorously with customers to promote sales and pay outstanding fees. They were also asked to focus on production at the lowest possible variable cost.
SAIL is sitting on a huge debt, too. According to Bloomberg, as at the end of September 2019, the PSU had Rs 48,181.35 crore, up from Rs 41,433.88 crore, as at the end of March 2019. However, speaking to the news channel, Chaudhary said that debt was not a problem for the company at the present stage.
