Essar Steel plans to raise $2 billion by June to pare rupee debt

Essar Steel, part of the diversified Essar Group, hopes to raise $2 billion from overseas by the end of first quarter of the current financial year, to retire its rupee debt, a top company official said.

"We hope to complete the raising of $2 billion loan from overseas market by June, which will help us in dollarising our balance sheet with reduction in interest rate," Essar Steel director-finance and chief financial officer Mahadev Iyer said.

The conversion of rupee loans into dollar will also increase the tenor of repayment to an average of 10 years, he added.

The savings on interest outgo, Mr Iyer said, would be around Rs 1,200 crore annually and the average interest cost would also come down from around 12 per cent to around 6-7 per cent after the completion of this process.

In June last year, the steel firm had raised $1 billion through external commercial borrowings, with an annual cost saving of around Rs 450 crore.

Essar Steel, which has a total debt of around Rs 26,000 crore, will also increase its focus on exports in the current financial year by taking it to 30 per cent of the total sales from present 25 per cent.

"We hope that current financial year will be better than last with higher domestic steel demand," chief executive and managing director Dilip Oommen said.

He said the steel firm aims to increase its capacity utilisation levels this fiscal year.

Essar Steel has a production capacity of 14 million tonnes per annum (MTPA) with presence in India, Canada, USA, the Middle East and Asia.