Business Daily from THE HINDU group of publications
Thursday, Jul 26, 2007
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Business Daily from THE HINDU group of publications Thursday, Jul 26, 2007 ePaper |
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Corporate
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Overseas Borrowings Ispat Ind plans to raise $500 m for project funding
Our Bureau Kolkata, July 25 Ispat Industries Ltd hopes to raise $500 million by way of FCCB (foreign currency convertible bonds) or ECB (external commercial borrowings) to fund new projects that are part of the company’s “vertical integration strategy,” according to Mr Pramod Mittal, Chairman of the company. Speaking at the company’s 22nd annual general meeting held here on Wednesday, Mr Mittal said Ispat Industries was focussed on reducing its dependence on third-party raw material suppliers, as also its exposure to price volatility of basic inputs. Towards this end, it had taken up additional cost-saving and capacity-enhancing capital projects. These include a one-million tonne per annum (mtpa) capacity coke oven plant at Dolvi in Maharashtra that would be operational by mid-2009. A 4.5-mtpa pellet plant would be set up at Visakhapatnam by the third quarter of 2009. The company’s HR coil manufacturing capacity was being augmented to 3.6 mtpa from three mtpa at present even as it has been proposed to increase the capacity of the sinter plant and the sponge iron plant to 2.5 mtpa and 1.8 mtpa, respectively. The total investment in these projects has been pegged at Rs 2,000-2,200 crore. Major weaknesses
Mr Mittal said a high-debt burden, high energy and raw material prices as also lack of access to captive sources of crucial raw materials such as coke and iron ore were among the major weaknesses of the company. To overcome these “weaknesses,” Ispat Industries was trying to retire part of the debt and also reduce the interest burden on existing debt by swapping of currency. In the current fiscal, the company’s net saving on this score is expected to be around Rs 150 crore. According to him, the company was keen to secure raw material linkages from domestic as well as global sources. It will soon start prospecting work on the Chandrapura iron ore mine in Maharashtra even as a proposal has been made for setting up a steel plant in Jharkhand provided an iron ore mine was allotted to the company. Mr Mittal said that “steel is gradually becoming a local rather than global business” in view of various costs, including the cost of logistics. With this in mind, Ispat Industries was addressing local markets with an appropriate strategy and building long-term relationships with its customers. During the year ended March 31, 2007, Ispat Industries earned a total income of Rs 7,595.49 crore against Rs 5,010.73 crore in 2005-06. The company recorded a net loss of Rs 9.53 crore in 2006-07 compared with a net loss of Rs 812.67 crore in 2005-06.
More Stories on : Overseas Borrowings | Steel
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