Financial Daily from THE HINDU group of publications
Tuesday, Jun 14, 2005
Financial Daily from THE HINDU group of publications Tuesday, Jun 14, 2005 |
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Corporate
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New Projects Jindal Vijayanagar may raise $500 m to fund expansion Our Bureau
Mr Sajjan Jindal (left), Vice-Chairman & MD, Jindal Vijayanagar Steel Ltd, with Dr S.K. Gupta, Director, at the company's AGM in Mumbai on Monday. — Paul Noronha
Mumbai , June 13 JINDAL Vijayanagar Steel Ltd (JVSL) has obtained shareholders' approval to raise $500 million through a foreign currency convertible bonds (FCCB) issue. The company is expanding its steel-making facilities from 2.5 mt to 3.8 mt at a cost of Rs 1,275 crore. $500 million will be raised in the event the company's expansion goes beyond 3.8 mt. Fund requirements for the current expansion have already been tied up; Rs 450 crore from internal accruals and Rs 800 crore as debt. The company said it would go for an FCCB issue only if the premium is around 50 per cent, officials said. "We recognise the growth of our business and the need to migrate to a low-cost structure that will sustain us in good markets and bad," Mr Sajjan Jindal, Vice-Chairman and Managing Director of the company, said at its annual general meeting. The company also rationalised its debt-equity ratio from 2.37 in 2003-04 to 1.33 towards the end of 2004-05. "This will improve on further consolidation." The need to consolidate its business stems from the fact that demand for steel in India is expected to be robust. Quoting the National Steel Policy of 2003, the company said the country's steel capacity is expected to go up to 100 mt by 2018 from the current 35 mt. "The opening up of the construction sector to foreign investment, impetus for power generation and distribution, commissioning of road development and rural housing projects across India are expected to sustain steel demand in India," the annual report of the company said. The company also obtained shareholders' approval for changing its name to Jindal Steel Works Ltd.
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