Essar Steel, part of the diversified Essar Group, hopes to raise USD 2 billion from overseas by the end of first quarter of the current financial year, to retire the rupee debt, which will help reduce its interest outgo, a top company official said.
"We hope to complete the raising of USD 2 billion loan from overseas market by June, which will help us in dollarising our balance sheet with reduction in interest rate," Director-Finance and Chief Financial Officer of Essar Steel, Mahadev Iyer, said. The conversion of rupee loans into dollar will also increase the tenor of repayment to an average of around 10 years, he added.
The savings on interest outgo, Iyer said, would be around Rs 1,200 crore annually and the average interest cost would also come down from around 12 per cent to around 6-7 per cent after the completion of this process. In June last year, the steel firm had raised USD 1 billion through external commercial borrowings, with an annual cost saving of around Rs 450 crore.
Essar Steel, which has a total debt of around Rs 26,000 crore, will also increase its focus on exports in the current financial year by taking it to 30 per cent of the total sales from present 25 per cent. "We hope that current financial year will be better than last with higher domestic steel demand," Chief Executive Officer and Managing Director, Dilip Oommen, said.
He said the steel firm aims to increase its capacity utilisation levels this fiscal. Essar Steel has a production capacity of 14 million tonnes per annum (MTPA) with presence in India, Canada, USA, the Middle East and Asia.