The Rs 8,250-crore expansion project of the Visakhapatnam Steel Plant (VSP) is attracting foreign banks such as Citibank, HSBC, France's Calyon Bank and a few others. |
The company has decided to expand its capacity to 6.3 million tonne by 2007-08 from 3 million tonne and these banks have evinced interest in financing the project. |
Of the total project cost, close to Rs 5,750 crore would be met from internal accruals. This includes about Rs 3,000 crore that VSP has invested in fixed deposits with various public banks. |
The company proposes to raise the remaining Rs 2,500 crore through debt, both in Indian rupees and foreign currency. The proposed tenure of the debt is likely to be five years. |
"To raise Rs 2,500 crore, we have invited banks, financial institutions and other agencies to either lend or arrange the amount on their own or by way of a consortium," G N Murty, assistant general manager (finance), VSP, said. |
The company needs foreign currency of about Rs 1,500 crore to import machinery, he added. Many Indian and foreign banks have shown interest in financing the entire Rs 2,500 crore on their own without any consortium, he said. |
"We have been getting a lot of enquiries from several foreign banks. Citibank, HSBC, Calyon Bank, State Bank of India, Canara Bank, Bank of Baroda and ICICI Bank have already submitted their proposals," he said. |
Due to overwhelming response, VSP expects the funds to come at 5-7 per cent interest. |