Essar Ports to refinance Rs 2400cr debt via rupee ECB

Essar Ports seems worried about the cost of debt getting out of hand. The company has outlined a Rs 9,200-crore expansions plan with Rs 2,500 crores expenditure coming in this fiscal itself.

While the company's debt to equity ratio is still decent at 1.7:1, it is now looking to refinance almost a quarter of its debt through government's recent scheme of rupee ECBs for infrastructure projects. The company looks to refinance Rs 2,400 crore, nearly 30% of total debt through rupee ECB.
The new ECB guidelines for the infrastructure sector enable 25% of the ECBs to be used for refinancing existing debt. Rajiv Agarwal, chief executive officer of Essar Ports said that the company would try to use this scheme for the newer projects, though ECB funding is not easily available with Indian banks. "We would be working to reduce cost of debt by refinancing it through government ECBs," he added.
When asked about the quantum of funds that Essar would look at financing through this ECB mode, Agarwal said, "We would like to have about 35-40% coming out of ECB."
Essar Ports' expansions would be completed by 2014. The company plans to add a total of 158 million tonne as well.
According to the company, the port utilisation would go up to 75- 80 % in three years from 50% now. The company expects the third party business to contribute 25% from only 2% now in three years. Also watch the accompanying video for Rajiv Agarwal's comments...