Leading alloy-maker JSW Steel will this week seek shareholders’ approval to raise up to Rs 4,000 crore through qualified institutional placement (QIP) and Rs 10,000 crore from selling non-convertible debentures (NCDs).
The Sajjan Jindal-led firm will seek shareholders’ nod at its annual general meeting to be held here on Tuesday to raise the funds.
The NCD sale may be carried out in one or more tranches during the current financial year on a private placement basis, the company said in its annual report.
The firm said it will be completing its present brownfield expansion to reach 18 million tonnes per annum (mtpa) capacity by the end of financial year 2015-16.
It has a strategic vision to reach 40 mtpa capacity by 2025 with significant investment in mineral resources like iron-ore and coal.
The company plans to raise long-term resources with convertible option so as to optimise capital structure for future growth.
The proceeds of the issue will be used for long-term funding to meet the planned capital expenditure and for other corporate purposes, including refinancing of expensive debt, to reduce interest costs and meet any unlikely shortfall in unforeseen circumstances, the report said.
The outlook for the steel industry remains robust and the prospect of capital investments are bright, subject to, however, the timely intervention by policy makers to remove the constraints faced by the industry.
As a result, the domestic economy is well poised to improve its ranking even further in the coming years, growing in capacity, quality and cost leadership, Jindal said in the report.
While the industry is keen to create new capacities to meet the strong domestic demand, it is also important for the government to address the bottlenecks around new capacity creation, he added.
Although domestic steel demand grew by 3.1 per cent in financial year 2014-15, imports of finished steel into India surged by 71 per cent to 9.3 mt.
This was effectively ‘dumping’ by China and Russia as well as countries like Japan and Korea who enjoy concessional rates of import duty for steel under FTAs.
This unprecedented surge in imports is hurting and causing injury to the domestic steel industry.
Besides, the government’s initiatives to implement ‘quality order’ to ensure safety and quality in usage are being resisted by vested interests, Jindal said.
For domestic players, the challenge is three fold – scarcity of key raw materials, moderate domestic demand and proliferation of unrestrained dumping, he added.