Public sector Rashtriya Ishpat Nigam Ltd (RINL) has re-activated preparation for its mega long-term borrowing plan. As a beginning, it has hired two credit rating agencies — India Ratings and Crisil.

The Rs 22,500-crore term loan plan, mooted first in mid-2011, was later on put on hold due to a depressed market. Early this year, the RINL Board chalked out a 10-year roll-out programme beginning with the current year.

The credit rating agencies are expected to complete their first exercise by December.

P. Madhusudan, Director Finance, RINL, told Business Line that after the ratings were available, the decision for the 2012-13 tranche would be firmed up.

Long-term borrowing

Earlier, given the short time window available, the company had decided that that the current year’s long-term borrowing size would be limited to Rs 1,500 crore, in synch with capital expenditure plans for the early part of 2013-14. At present, RINL does not have any term loan in its books. But it has resorted to short-term borrowings of about Rs 3,000 crore, principally to meet working capital requirement.

The short-term loans tenures are also favourably poised at this moment. Though the loan duration varies between 30 days to a year, 180-day borrowings are predominant.

So far, internal cash generation saw the steel maker through the graded expansion programme. However, indications suggest that cash flow for the unlisted RINL this fiscal could be lower than that last year.

If the Government-owned company has to stick to capital expenditure commitment at the same time, maintain the dividend payout trend and keep the debt-equity ratio at a manageable level, then it has to organise additional funds through long-term borrowing.

RINL’s equity base is Rs 7,827 crore, of which, Rs 2,937 crore is redeemable preferential shares.

>jayanta.mallick@thehindu.co.in

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