Bonds issued by the Steel Authority of India Ltd (Sail) on August 30, 2001, with the aim of raising Rs 200 crore, have been oversubscribed. By September 10, the closing date of the issue, bids worth Rs 500 crore were received by the company, sources told Business Standard.
Guaranteed by the Centre, the non-convertible bonds have a tenure of two years with redemption in September 2003. The bonds were rated MAAA (SO) by credit rating agency Icra Ltd. The issue was lead managed by SBI capital Markets Ltd, RR Financial Consultants Ltd, Centrum Finance Ltd and ICICI Securities & Finance Ltd.
On August 1, the company had come out with a bond issue to mop up Rs 250 crore at a coupon rate of 9.20 per cent. However, the issue met with little success as subscriptions were only to the extent of Rs 20-25 crore. Sources disclosed that SAIL then decided to hit the market with bonds carrying a higher coupon rate.
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This is the first bond issue done by the steel major for the current financial year. The proceeds of the issue are to be utilised for loan repayments.
In February 2001, SAIL had come out with a bond issue. But as interest rates fell, it was terminated abruptly. The remainder of the issue was completed in June 2001. "Though the remaining part of the issue was done in this financial year, it was a part of the previous year's issue," sources said. That issue too had mobilised Rs 500 crore.
Sources also disclosed that the company is hopeful of soon completing the divestment in its power plants located at Bokaro. Damodar Valley Corporation (DVC) has agreed in principle to become an equity partner in the power plants. The power plants of the Bokaro Steel Plant are being transferred to a separate company in which DVC has agreed in principle to hold a 50 per cent stake. There are two power plants at Bokaro. While one has a capacity of 122 mw, the other has a capacity of 180 mw. Thus, between the two, the combined capacity is 302 mw. The value of the power plants has not yet been fixed.
Apart from the power plants, Sail has put up other units also for disinvestment during the current financial year. These include Visvesvaraya Iron & Steel Plant and the fertiliser unit of the Rourkela Steel Plant.