Essar Ports Dec quarter profit doubles to Rs.90 cr, eyes debt refinancing

Essar Ports, the second-largest private port operator in India, plans to refinance R275-280 crore of its debt by next quarter through Indian lenders as it looks to reduce interest costs. The refinancing plan follows a strong set of financial results at Essar Ports, which reported a two-fold jump in quarterly net profit as it handled more cargo.

The company?s October-December net profit increased to R90.4 crore from R45 crore in the same period a year earlier. Revenue surged 33% to R367 crore. It handled a total of 14.34 million tonnes of cargo during the quarter, which is the highest amount of cargo handled in one quarter for Essar Ports.

Essar Group companies, which have a combined debt of more than R80,000 crore, have been looking for ways to reduce their debt burden.

Indian companies have been increasingly replacing their rupee debt with foreign debt, as interest rates are lower abroad. Essar Oil outlined plans to raise $2.2 billion through external commercial borrowings (ECBs) when it reported quarterly results on Tuesday.

The move to refinance debt through Indian lenders would help reduce interest rates by about 2.5 percentage points, Shailesh Sawa, director (finance) at Essar Ports, told FE on the sidelines of a post-earnings conference call.

Essar Ports, which operates ports at Hazira and Vadinar in Gujarat and Paradip in Orissa, was one of the first companies to be part of the government?s ?take out financing? scheme through IIFCL, refinancing R405 crore of its debt at EBTL Hazira, bringing down interest cost by 2.65%.

?Raising money through ECBs is also a good option, which we are considering,? he said. ?However, since we have limited foreign currency exposure, our ability to refinance through ECBs is constricted.?

A ?major announcement? regarding debt refinancing, which will reduce interest rates can be expected within the next six months, he added. Share of the company was down marginally to close at R93.50 on the BSE on Thursday.

The company, which has a total operating capacity of 104 million tonnes a year, had debt of R5,677 crore at the end of the year, most of it classified as operational. It has spent nearly 80% of its capital spending budget for the current financial year, and plans to spend a further R2,000 crore over the next two years.

The funds for Essar Port?s capital expenditure plans have already been tied up from Indian lenders.