Bloomberg reported that JSW Steel Ltd plans to raise USD 1 billion in overseas loans to cut interest costs and boost profit amid falling prices.

Mr Seshagiri Rao group CFO of JSW Steel Ltd said that the funds will be used to pay rupee debt of JSW Ispat Steel Ltd after absorbing the unit, which the parent company acquired almost 2 years ago. JSW Ispat, which has a debt of INR 70 billion, pays about 11% interest, while JSW Steel pays 7%.

Mr Rao said that “JSW Ispat remains a positive story for us and with reduced costs, it should show a turnaround. We are seeking the Reserve Bank of India’s approval to raise foreign loans.”

According to Worldsteel, curbs on iron ore mining and high interest costs have hindered JSW Steel’s effort to turn around the unit. Slowing demand and a decline in steel prices are prompting mills to try and cut borrowing costs and use lower grade raw material. India’s steel demand is forecast to grow 5.5% this year and 5% next year.

Source - Bloomberg

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