The Hindu Business Line : Jisco, JVSL debt set to come down

THE combined outstanding debt of Jindal Iron and Steel Company Ltd (Jisco) and Jindal Vijaynagar Steel Ltd (JVSL) is expected to come down to Rs 3,500 crore by the end of the current fiscal from the current level of Rs 4,100 crore.

It may go down further to Rs 3,000 crore by March 2006.

Mr Sajjan Jindal, Chairman and Managing Director, Jisco, said that the company is aggressively trying to reduce debt and would like to settle at a debt-equity ratio of 1:1.

Even as debt is being paid off, the two companies are in the process of going in for more borrowings to meet various expansion plans.

Finances for the Rs 1,275-crore four million tonne expansion plan at Bellary in Karnataka have already been put in place, an official said.

The company plans to pump in Rs 425 crore from its internal accruals and the remaining Rs 850 crore has been approved by a group of banks led by ICICI Bank.

The Sajjan Jindal group, which has acquired 40 per cent holding in Southern Iron & Steel Company Ltd (Siscol) from Laxmi Machine Works, is also in the process of putting an expansion plan in place at Siscol's Salem facility.

The capacity is being increased to 8,00,000 tonnes from 3,00,000 tonnes at a cost of Rs 400 crore.

Of this Rs 280 crore is the debt segment and the financial closure has been completed.

The remaining Rs 120 crore is being raised through a rights issue.

Siscol on Wednesday announced a rights issue in the ratio of eight equity shares for every five held. Jindal's plan to set up a five-million tonne steel plant in West Bengal would largely depend on the allotment of iron ore mines, which are in Jharkhand, Mr Jindal said.

The West Bengal Government is in talks with the Jharkhand Government, he added.

As two Governments are involved, Jindal may set up a split location steel plant that will partly be in both the States.

Kharagpur has been identified as an ideal location for the plant, he said. The port is about 120 km and the iron ore deposits 50 km away.

"If the West Bengal plan goes ahead, we may slow down the expansion programme at Karnataka," said Mr Jindal.

This plant will manufacture semi-finished products such as billets for the domestic market and slabs for the export market.

Chinese demand for steel is expected to move down but imports would remain at a high level of 25 million tonnes. "Steel prices will be driven by raw material prices in the coming years rather than demand."