After failing to launch the initial public offer so far, state-run Steel Authority of India (SAIL) now plans to borrow $400 million from overseas lenders to part-finance its expansion and modernisation plans.
"The company has sought expression of interests from overseas lenders to raise $400 million through external commercial borrowings (ECBs)," a source in the know said.
The source said the fund would be used to finance SAIL's modernisation and expansion plans.
The Maharatna company has already embarked on a Rs 70,000 crore capacity expansion plan to take its domestic production to 23.46 million tonne per annum by 2012—13 from 14.35 million tonne at present. It has Rs 14,337 crore capital expenditure plan for the current fiscal.
In addition, SAIL has already expressed its intention to set up four 3 million tonne manufacturing facilities --one each in Oman, Indonesia, Mongolia and South Africa -- at a cumulative investment of $12 billion.
The source, however, said that the lenders from whom the targeted amount would be borrowed would be decided upon later depending upon their terms and conditions. The deadline for their response could not be ascertained.
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SAIL Chairman CS Verma had earlier this month said that the follow-on public offering, delayed since December last year due to various reasons, is likely to spillover to July- September quarter due to volatile market conditions.
The government holds a little over 85% in SAIL and plans to divest 5% of its holding in the first phase of the disinvestment. The company would also come out with fresh equity issue of 5%.