JSW Steel will be raising Rs 1,000 crore from an export credit agency and $280 million (Rs 1,270 crore) via external commercial borrowing (ECB) to fund its 2.3-million tonne cold-rolling mill to be set up at its flagship Vijayanagar (Bellary) steel factory.
The project is to cost about Rs 4,000 crore and the debt component is Rs 2,600 crore, with a debt to equity ratio of 2:1. Seshagiri Rao, joint managing director and Group CFO, said: “Export credit agencies in Germany and Japan have agreed to give us Rs 1,000 crore for the import of machinery from the respective countries.” He said the terms had been finalised, though the letter of approval would take some time.
The non-loan portion of the cost is to be met by internal cash generation. The planned unit, to produce steel primarily used by the automobile and white goods sectors, is being set up with help from JFE of Japan.
Jayant Acharya, director (sales and marketing) of JSW Steel, on January 27, during the company’s third-quarter results’ announcement meet, had said: “The technology of making steel for autograde is something we are doing with them (JFE). The equipment for that will have to be procured by us from the suppliers of the mills.” JSW aims to complete the unit in two phases, by the first quarter of 2014-15. Currently, the company has a 1-million tonne cold-rolling capacity.