The Hindu Business Line : Essar achieves financial closure for Rs 860-cr Salaya terminal

Other project
In advanced stages of wrapping up financial closure for its Rs 930 crore expansion of Vardinal oil terminal in Gujarat from 10.5 mt to 16 mt.

Amit Mitra

Hyderabad, Nov. 3

As the bleak Lehman winter of last year gives way to a brighter season this year, Essar Shipping Ports & Logistics Ltd (ESPLL) pulled off a series of financial closures amounting to about Rs 4,000 crore with domestic and foreign banks in the last two months to fund its various expansion plans.

A few days ago, ESPLL, part of the diversified Ruias-controlled Essar Group, wrapped up financial closure of Rs 605 crore for its Rs 865-crore integrated bulk terminal project at Salaya, Gujarat.

The 10-million-tonne (mt) port facility will handle import of coal and export of pet coke for power plants.

Sources indicated that a host of Indian banks, such as Punjab National Bank, Corporation Bank, Union Bank and State Bank of Hyderabad, was involved in the Salaya terminal financial closure.

This is fourth in the series of financial closures by the company in the last two months or so.

In August, the company sealed the financial closure of $155 million for purchase of six dry bulk carriers at a total cost of $218 million, which was quickly followed by the financial closure for its Rs 773-crore bulk terminal project at Hazira.

Weeks later, it clinched the financial closure for its semi-submersible rig, Essar Wildcat, for $240 million, with a consortium of offshore as well as Indian banks participating in the deal. As part of the Wildcat deal, the company was given a four-year facility at competitive terms.

Confirming the Salaya project financial closure, Mr V. Ashok, EXPLL Director, said the project is now expected to go on stream by April 2011, with some of its major clients, including group companies such as Essar Power, Essar Oil and Vadinar Power Company. “The project already has committed revenue of Rs 240 crore,” he told Business Line.

With the global economic pangs appearing to ease, ESPLL is expected to finalise the financial closures for two of its other projects by the end of the third quarter of the current fiscal.

It is in advanced stages of wrapping up financial closure for its Rs 930 crore expansion of its Vardinal oil terminal in Gujarat from 10.5 mt to 16 mt.

“We hope to complete financial closure of the oil terminal expansion programme by end December.

“The project is being financed through a debt of Rs 650 crore and equity of Rs 279 crore. A consortium of Indian banks is participating in the deal,” Mr Ashok said.

The company is also procuring two jack-up rigs at $440 million from India’s largest private sector shipyard, ABG Shipyard, which are expected to join its fleet within 20 months.

“We are hopeful of completing the financial closure for these two jack-up rigs also around the same time,” he said.

ESPLL is in the process of acquiring another six mini-cape dry bulk carriers at $412 million, as part of its overall capex programme of $1.6 billion. The financial closure for these ships, being built at STX Shipyard, may take place by mid-2010.

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