Dilip Oomen, Managing Director and Chief Executive of Essar Steel informed media persons that the company plans to replace its rupee debt with dollar debt in order to reduce interest cost.
By September 2013, the firm plans to refinance its entire domestic debt of around Rs 20,000 crore into dollar terms.
Oomen said the company expects to reduce its interest cost to 6-7 per cent from the present cost of 12.25-13 per cent through this process. This would have a tremendous impact on its profitability, he said.
The company, which had around Rs 22,000 crore in rupee debt, had received approval from the Reserve Bank to raise $430 million (around Rs 2,400 crore) last fiscal.
He said this on the sidelines of India Steel-2013 Summit organised by Ficci. He also said this would have significant impact on its cost of funds.
The company produced 4.3 million tonne steel (out of the 10-mn t capacity) at our Hazira unit, which is the critical mass to take production up further.
Already, its profitability is showing big improvement, he said. In order to draw independent power from the grid, the company set up a 400-kv transmission line. This would enable the company to save Rs 50 crore, he said.
Meanwhile, the company expects the 12 mn t pellet plant at Paradip in Odisha to be ready by the end of the year.