Essar Ports has re-financed its debt in a subsidiary, Essar Bulk Terminal Ltd , through a finance scheme of the India Infrastructure Finance Company Ltd (IIFCL).
The ports major has availed of the take-out finance scheme to reduce its interest rate by over two-and-half per cent on Rs 405 crore, which is part of the debt taken for building its 30 million tonne capacity bulk terminal at Hazira in Gujarat.
The take-out finance of infrastructure projects by IIFCL is a Government initiative, wherein an infrastructure project on commissioning can replace some of its costly domestic rupee debt with finances from IIFCL. While this lowers the interest burden on infrastructure projects, it also facilitates incremental lending to the infrastructure sector by freeing up the capital of banks.
In a statement, Shailesh Sawa, Director, Finance, Essar Ports said, “As part of our constant endeavour to reduce the cost of debt, we have availed the Government initiated scheme of take-out finance. This will reduce our cost of debt and we will undertake more such initiatives to deliver better returns to our shareholders.”
Earlier this year, Essar Ports entered a strategic alliance with the Port of Antwerp, receiving an equity infusion of Rs 175 crore at approximately Rs 100 a share. The proceeds from this transaction was used to reduce the company’s debt. The company’s policy this year has been to reduce interest costs.