Steel Authority of India Ltd (SAIL) is planning to double its capacity to 50Mt/yr by 2025 in what is being described as its biggest expansion drive in the company's history.

The expansion will embrace two phases, taking SAIL's production capacity from a projected 23.5Mt per annum in 2015 to 35Mt/yr by 2020 and then 50Mt by 2025/26.

Funding for the expansion would be a mix of cash generated through its operations and raised debt. There are no plans to divest shares to raise capital, claims SAIL chairman CS Verma.

For the company's current expansion plan SAIL raised almost two thirds of the required funding from internal accruals.

Verma claims that SAIL can 'easily generate cash for at least 50% of the capital required internally' claiming that the Indian steelmaker's debt equity ratio is very healthy and adding that there would be 'no shortage of lenders'.

A report in the Hindustan Times claims that SAIL has already started issuing tenders for some of the enhancement work and that it wants to 'hit the ground running in 2016'.

Fortunately for SAIL, the company does not suffer from a lack of land or iron ore – major stumbling blocks for Indian steelmakers. There is around 20,000 acres of land available to SAIL and it has captive iron ore reserves of 3.5 billion tonnes.

Source: Hindustan Times