JSPL Mauritius, a subsidiary of Delhi based Jindal Steel & Power, has raised about USD 150 million (about INR 835 crore) through an external commercial borrowing program to repay loans taken from the Indian parent.

The company has raised a five-year loan from a consortium of banks comprising Standard Chartered Bank, ANZ Bank and Bank of Tokyo-Mitsubishi at a cost of 300 basis points over the Libor.

Jindal Steel finance director Mr Sushil Maroo said that “It will pay about USD 100 million to Jindal Steel & Power as part repayment for loans taken earlier.”

Mr Maroo said that "We are bringing back money that we had earlier lent to our foreign subsidiaries for projects that we are building overseas. The idea is to allow our subsidiaries to raise loans overseas for projects outside India and to not leverage the Indian parent company.”

The move is expected to be in line with Jindal Steel's plan to ring-fence the parent company from fluctuations witnessed in its overseas projects, mostly in mining and exploration, where the completion of the projects hinges on regulatory approvals and remains uncertain.

According to analysts, the strategy to allow foreign subsidiaries to raise money, especially in mining and energy businesses, is entirely expected.

Mr Kumar Nair MD of Mumbai based Transwarranty Finance, an investment bank that provides financial services to over 400 large and mid-cap companies said that "It's bound to happen. The loan depends on the quality of assets that the foreign subsidiary owns.”

Last month, JSPL, through its Mauritian subsidiary, acquired Canadian coal miner CIC Energy for Canadian USD 116 million (about INR 600 crore). In 2010, the Delhi-based steelmaker used Jindal Steel Mauritius to acquire Oman's Shadeed Iron & Steel for USD 464 million.

Source - Economic Times

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