(LivMint)
State-owned Steel Authority of India Ltd (SAIL) has declined a government call for a dividend for the last financial year, saying it did not have “any cash and bank balance” and that its debt-to-income ratio was much higher than agreed with some lenders, showed an internal document reviewed by Reuters. Shares of the company, which has a market value of around $4.7 billion, were down more than 2 percent after the news in a wider market that was largely flat.
SAIL’s refusal could make it harder for the government to meet its budgeted target of raising Rs 1.06 trillion ($14.95 billion) from dividends and profit of state-owned companies this fiscal year ending March. Last fiscal year, the government received Rs 1.23 billion, 13% below the then target. India’s second-biggest steel firm by current production said it had been due to pay out Rs 21.71 billion, including tax to the government based on its “net-worth” last fiscal year.
“SAIL does not have any cash and bank balance and would need to borrow from the market for payment of dividend,” SAIL said in an explanation sent to the government expressing its inability to pay the dividend. “It is getting increasingly difficult to borrow further from the market in the current market conditions, especially for the steel sector, as the financial institutions and banks are reluctant to take further exposure on steel industry.”
