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SAIL raises INR 600 crore to refinance debt & fund expansions
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Thursday, 22 Nov 2012
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My Digital FC reported that Steel Authority of India is raising INR 600 crore through a commercial paper issuance to refinance its debt and for brown field expansions.

Mr CS Verma chairman of SAIL said that “We are raising the funds through commercial paper mainly to repay a part of our debt. Further the company is also looking at raising funds for its expansion and modernization but we have not yet decided on the amount and time.”

Public sector undertakings are thronging corporate bond market as banks and mutual funds evince interest in investing into these issues.

A banker who invested into the issue said that “SAIL rise about INR 600 crore from the corporate bond market with a commercial paper issuance of INR 150 crore each in 4 trenches. The coupon rate for 122 to 127 day paper was 8.55% to 8.60%.”

Mr Verma said that “The company has gross debt of around INR 21,000 crore and cash of INR 6,000 crore as of September 30th. So the company keeps assessing the corporate debt market often to repay some of the debt.”

SAIL has earmarked CAPEX of INR 14,500 crore in 2012-13 as the final phase of its 5 year, INR 72,000 crore modernization and brown field expansion plan.

After the modernization and brown field expansion SAIL’s hot metal capacity will increase to 23.4 million tonnes per annum from 14.6 million tonnes per annum. The company has been funding its INR 72,000 crore modernization and expansion plan through internal accruals and debt.

Mr NS Venkatesh head of treasury, IDBI Bank said that “Companies are borrowing at the shorter end of the curve and not locking in at higher interest rates for a longer duration. If the RBI cuts rates in the mid-quarter on December 18th, the domestic lending rates could fall further. Till then companies will meet their borrowing requirements through short term CP issuances.”

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