Expecting an increase in funding requirement for its ambitious expansion plans, JSW Steel has sought shareholders’ approval to enhance the borrowing limit by up to 60 per cent, at Rs 40,000 crore.
The Sajjan Jindal-led steel—maker, which currently has 14 million tonne per annum (mtpa) capacity, intends to raise the limit for various capex programmes including acquisition, JSW Steel said in its notice for annual meeting with shareholders, scheduled to be held on July 30.
The company has a borrowing limit of Rs 25,000 crore. On the other hand, it had Rs 21,346 crore consolidated debt at the end of last fiscal. It excludes Rs 6,500 crore debt of JSW Ispat, which was merged with the firm few weeks back.
The aggregated debt coupled with the company’s proposed expansion and acquisition plans is expected to have propelled the firm to seek shareholders nod for a Rs15,000-crore hike in the borrowing limit.
JSW intends to jack up capacity of 10 mtpa Vijayanagar plant in Karnataka by an additional 2 mtpa. Besides, work is in progress on a new steel mill in West Bengal. These two plans would entail over Rs 20,000 crore investments.
The shareholders had in 2010 approved to increase the borrowing limit of JSW to up to Rs 25,000 crore.
“Taking into consideration the requirement of additional financial resources to meet the company’s capital expenditure programmes...the said limit of Rs 25,000 crore in excess of the aggregate of the paid—up capital of the company and its free reserves, is utilised to a considerable extent,” JSW Steel said in the latest annual report.
“It is, therefore, proposed to increase this limit from the existing Rs 25,000 crore to Rs 40,000 crore...,” it added.
On a consolidated basis, JSW Steel’s net—debt gearing was at 1.11, as on March—end, compared to 0.98 at the end of the previous fiscal.