Getting cheaper loan from PSBs vs REC: Neyveli Lignite

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Getting cheaper loan from PSBs vs REC: Neyveli Lignite

Neyveli Lignite's Director of Finance K Sekar said they were getting cheaper loan from public sector baks versus REC. "Banka of Baroda and Bank of India consortium is offering loan at 9.75% interest, which will save us Rs 75-80 crore in interest costs."

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See latest News about Neyveli Lignite See previous management interviews See what other Experts & Brokerages are saying about Neyveli Lignite Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Bank Of Baroda | Bank Of India | Rural Electrification Corporation |

Neyveli Lignite , a government-owned lignite mining company recently replaced Rural Electrification Corporation (REC) loan with cheaper loan from Bank of Baroda . REC was to lend Rs 3,500 crore at 11.2% interest. However BoB would be lending the same amount at 9.65% interest.

Commenting on the issue, the company's Director of Finance K Sekar said they were getting cheaper loan from public sector baks versus REC. "Banka of Baroda and Bank of India consortium is offering loan at 9.75% interest, which will save us Rs 75-80 crore in interest costs."

Here is a verbatim transcript of the exclusive interview with K Sekar on CNBC-TV18. Also watch the accompanying video.

Q: Can you take us through the details of this Rs 3,500 crore loan?

A: Originally, we had applied loan to an extent of Rs 3,437 crore from the Rural Electrification Corporation at the interest rate of 11.1%. It was the lowest rate at that point of time when we applied for that loan. But based upon the market conditions, since we are able to get now a cheaper loan-interest rate at a lower rate-we went in the open market on LT basis to 27 nationalized bank now. We have got the opportunity of getting a cheaper loan. We are doing the valuation now.

Q: Is it bank of Bank of Baroda?

A: It is Bank of Baroda who has quoted at a cheaper rate as compared to others.

Q: What is the cheaper rate?

A: They have quoted at 9.7% for the entire loan with a consortium of another bank called Bank of India.

Q: Didn't UCO Bank quote just about 9%?

A: That is 9.05% originally they quoted but they did not come back after that. They told only for Rs 1,000 crore or so they will be able to provide that loan and without consortium they cannot come also. That is why we could not take it.

Q: So what is the interest cost saving now that you have replaced REC with BOB?

A: There will be a total saving of Rs 75-80 crore in absolute terms.