JSW Steel plans to raise $600 million through overseas borrowings during the April-June quarter to refinance part of its rupee loan.

The company has signed firm term-sheets (or in-principle agreements) for half of the amount so far, JSW Steel’s Joint Managing Director and CFO Seshagiri Rao M.V.S. told PTI.

“So far we have signed firm termsheets for around $300 million out of a total of $600 million which we are going to refinance... May be early next financial year, in the first quarter we should be able to do that (refinance part of rupee loans),” he said.

Noting that interest costs on foreign borrowings are much less than on rupee loans, Rao said that JSW Steel would be able to save about Rs 300 crore on its total interest outgo post refinancing.

For this, the company has sought approval of the Reserve Bank of India as it wants to avail itself of a facility, provided by the apex bank in June last year, to domestic manufacturing and infrastructure companies on refinancing rupee loans through foreign currency loans.

According to this, the eligible firms can raise up to $10 billion foreign currency loans based on weighted average of exports in the last three years to repay their rupee loans.

The companies would be eligible for the external commercial borrowings only after meeting certain conditions and will require RBI approval before going for such borrowings.

“Today we are in a process of tying up. The RBI has told us that they are willing to give the approval subject to firm termsheets for the entire amount,” Rao said, adding that JSW Steel had applied in October 2012 itself to avail itself of the facility.

The company has a total debt of about Rs 21,500 crore and foreign currency loans amount to 55 per cent of its debt.

Besides, JSW Ispat—the soon to be merged entity with JSW Steel—has about Rs 6,500 crore debt, including Rs 1,000 crore foreign currency loans.

Its consolidated interest outgo during the first nine months of the current fiscal, at Rs 1,460.10 crore, has already surpassed last fiscal’s total amount (at Rs 1,427.30 crore) on the same count.

The company, whose sales are dollar-linked, had reported net sales of Rs 34,123.65 crore and a net profit of Rs 537.68 crore in 2011-12.

During the first three quarters of FY’13, its sales stood at Rs 24,007.08 crore, while net profit was at Rs 667.20 crore.

(This article was published on March 14, 2013)
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