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COVID-19 disaster: Hit by liquidity crunch, SAIL appears to be like to preserve money, push recoveries

The steelmaker has seen piling-up of inventories and money flows drying due to the lockdown.

Facing liquidity crunch due to the COVID-19 disaster, SAIL chairman Anil Kumar Chaudhary has requested workers to overview every expense and preserve money, and observe up rigorously with clients to advertise gross sales and realise excellent dues. He has additionally requested them to concentrate on manufacturing at least attainable variable value.

The steelmaker has seen piling-up of inventories and money flows drying due to the lockdown.

In a written message addressed to workers on April 16, Chaudhary mentioned: “With cash collections being meagre and inventories increasing to a level of over 1.7 million tonne (MT) for finished steel, thereby, blocking cash worth over more than Rs 8,000 crore, SAIL is facing a difficult situation. We are a company with huge fixed costs and need optimum level of production to be maintained so as to absorb such costs. While it is understandable that profitability will take a severe beating in the coming months, it is the liquidity situation which is of immediate concern.”

Employees have been directed to achieve out to clients and preserve steady offtake of completed metal from the vegetation in order that money flows are maintained and penalties of a liquidity crunch are averted. They have additionally been requested to maximise gross sales via export channels.

Steel firms, on the whole, began seeing deferment of orders because the lockdown began on March 25.

According to score company Crisil, on a quarterly foundation, metal demand can be a washout within the first quarter of present fiscal.

SAIL can also be sitting on an enormous debt. According to Bloomberg, as in September 2019 finish, the PSU had Rs 48,181.35 crore, up from Rs 41,433.88 crore as in March 2019 finish.

In his message, Chaudhary has additionally mentioned precedence must be on producing metal at least attainable variable value in order that even when the corporate sells at diminished costs within the present depressed market situations, there’ll nonetheless be some constructive contribution. Special emphasis will probably be on fulfilling calls for as per clients’ want.

SAIL may also concentrate on upkeep, together with preponement of capital repairs, within the time of slowdown and put together for a fast launch as soon as the disaster is over.

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