Date: 2013-08-01

JSW to raise Rs 3,000 cr debt for auto steel plant

JSW Steel Limited, the country's lowest-cost steel producer, plans to set up a 2.3 million tonne per annum (mtpa) cold rolling mill complex to manufacture high-grade automotive steel at Toranagallu in Bellary district. The project is being implemented in phases at an estimated cost of Rs 4,500 crore with Phase-I getting operational by March 2013 and Phase II by December 2013.

In addition to the CRM complex, JSW has also signed an MoU with the state government for setting up a 3.42 MTPA coke dry quenching (CDQ) plant to produce steel. The third new investment project planned by the company is a 1.20 MTPA DRI (direct reduced iron) plant. The total investment on the two plants is Rs 2,400 crore.

Seshagiri Rao, joint managing director and group CFO of JSW, said the company would explore the option of ECA (export credit agencies) backed loans, available at competitive rates to fund about 50 per cent of the cost. "As 50 per cent of the project involves import of technology and equipment, the ECAs in Japan and Europe would be available for us to raise loans. We are looking to raise about Rs 3,000 crore from Japanese Exim Bank to fund our project. We are importing technology from JFE Steel Corp of Japan for the CRM project and the equipment will come from companies both in Japan and Europe," he said.

He said the ECA loans are available at a competitive interest rate of 3.2 per cent for Dollar denominated loans for a longer tenure of 10-13 years. The loans would be drawn as and when the import of equipment happens, he said, adding the company has placed orders for the equipment for CRM project.

Though the company can access funds at lower rates, it would result in its debt position further going up close to Rs 20,000 crore. Presently, its net debt stands at Rs 16,600 crore. The company has already tied up finance from domestic banks for its DRI project, Rao added.

"We have signed an MoU with Karnataka to set up three projects at the global investors

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