Plan to expand capacity by 3 million tonne ahead: JSW Steel

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Plan to expand capacity by 3 million tonne ahead: JSW Steel

Seshagiri Rao, Joint MD and Group CFO of JSW Steel, in an interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy, gave his opinion on the recently concluded budget and road ahead for the company.

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Q: What are you expecting in the form of a corporate debt restructuring for Ispat?

A: Ispat Industries has a long term debt of Rs 7,000 crore. We are looking for refinancing of this debt. We have already launched a syndication of this entire debt of Rs 7,000 crore. State Bank of India and Bank of India are helping us in syndicating this loan, which is in the market. In the next one or two month's time, we should be able to close this syndication.

Q: Is the current cost of that debt about 13%?

A: Current cost of rupee debt is around 12%. We are looking at refinancing this debt.

Q: What do you expect you will be able to cut the cost by?

A: There is some foreign currency loan of another Rs 2,200 crore out of Rs 7,000 crore, which has a different structure of interest rates. We have launched approximately USD 400 million of foreign currency syndication and the balance is by way of rupee loans. Overall, we expect 1% reduction in the overall interest cost from the current levels.

Q: When will this debt refinancing process get completed? Are you looking at any kind of PE options as well?

A: No. We are not looking at any PE options. This entire amount is being syndicated at the local bank market. We expect outer limit of another two months maximum and we will be able to close this.

Q: How would you be financing your Bellary expansion? How much are you planning to raise by way of loans in the current year and FY12? What will be your interest expenses?

A: Our weighted average cost of interest on the consolidated basis for a debt of Rs 14,200 crore which will be in the balance sheet as on December 31, 2010; is around 7%. For our expansion of Cold Rolling Mill (CRM) complex 2, we have already announced Rs 4,200 crore expansion funded by way of debt of Rs 2,600 crore, balanced on cash accruals of the company.

We are raising this Rs 2,600 crore in the international markets from Export Credit Agencies (ECA), which are the imports from Germany and Japan. We approached the ECAs and tied up the funding for that.

Similarly, we have done a syndicated foreign currency loan of USD 280 million in the international markets. Together, we have already tied up the funding for CRM 2. We are not looking at any further financing for our expansions at Vijaynagar in JSW Steel.