Reeling under financial distress, state-run steel major Steel authority of India Ltd (SAIL) would not vie for buying stakes in distressed domestic steel companies such as Monnet Ispat and Bhushan Steel, put up for sale by the joint lender forum (JLF), sources said.
The biggest steel-producing PSU in the country, SAIL is under financial constraint on account of the overall global recessionary trends in the steel sector and is yet to capitalise on the benefits from the government interventions.
The company had plunged into the red for the first time in 13 years in April-June quarter of the last fiscal and the trend still persists. However, in the October-December quarter of the current fiscal, it narrowed loss to INR 795 crore compared to a net loss of INR 1,481 crore a year ago. The company attributed the loss to higher coking coal prices.
“Besides, the company has undergone a massive expansion and modernization programme with an overall outlay of INR 70,000 crore. Hence, there are no plans currently for SAIL to buy stakes up for sale by the JLF,” a senior steel ministry official said.
Media reports say that the Sajjan Jindal-led JSW Steel is looking to acquire distressed assets in its effort to expand its capacity faster. NRI billionaire Anil Agarwal-led Vedanta Plc is also said to be on the lookout for these units.
The source, however, said that SAIL was expecting a financial turnaround with the completion of the ongoing expansion and modernization plans, adding that the company might revisit the plan to acquire stressed companies, if need be, at a later stage.
SAIL itself is currently to divest its three plants – Alloy Steel Plant, Salem Steel Plant and Visvesvaraya Iron and Steel Plant (VISP).
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