Jindal Stainless pares interest outgo through debt revamp

Jindal Stainless had reduced its interest cost by retiring a part of its debt and converting a part of the expensive domestic debt by cheaper foreign currency loans.

There has been a reduction in debt of Rs 140 crore and the average interest rate also which has come down to 6 per cent from 10 per cent during April-November 2003-04, N C Mathur, director, said.

As on 1 April, 2003, the company was liable to Rs 467 crore of rupee debts at 11.5 percent and Rs 181 crore of foreign loans at 5.9 per cent.

As on 2 December 2003, the rupee loans had fallen to Rs 220 crore payable at 8.13 per cent, while foreign currency loans rose to Rs 288 crore at 4.5 per cent,he said.

The company had paid off high cost debts to IDBI and IFCI of Rs 80 crore and Rs 53 crore and raised cheaper loans from other financial institutions at the same time during the period.

In the first six months of 2003-04, the company recorded a net profit of Rs 85 crore, higher 157 per cent than Rs 33.07 crore profit in the same period last year, while operating profits grew by Rs 23 crore to Rs 180 crore.

Total interest payments fell to Rs 23 crore from Rs 53 crore during the period. Being an exporter enables the company to get access to cheaper foreign currency loans, he added.

In 2002-03, the company's exports stood at Rs 735 crore, while its domestic sales were Rs 1280 crore.

Other companies such as Steel Authority of India(SAIL) too have lowered its interest cost. From Rs 1334 crore at the start of 2003-04, the company's interest payments fell to Rs 503 crore during the first half.

It repaid Rs 1,980 crore of debt during the period. However, SAIL repaid the entire amount from its cash surplus, a SAIL official said and no debt swapping took place during this period.