Jindal Stainless Hikes NCD Offering By Rs 100 Crore

Mumbai, July 27 | Updated: Jul 28 2004, 05:53am hrs
Jindal Stainless, Indias largest manufacturer of stainless steel, proposes to hike its borrowings by Rs 100 crore to Rs 300 crore through an issue of secured redeemable non-convertible debentures for funding its 1.5 lakh tonne, high-carbon ferro-chrome plant coming up in Orissa.

The company has already raised Rs 200 crore through similar instrument. The bond offering was oversubscribed by Rs 100 crore. The money was raised for a fixed coupon rate of 6.9 per cent with a 10-year tenor.

Since we got a good response, we have increased the bond offering size from Rs 200 crore to Rs 300 crore, Jindal Stainless finance director Arvind Parakh told FE.

The ferro-chrome plant, coming up in Orissa, requires capital expenditure to the tune of

Rs 950 crore. The first phase of the Orissa expansion is expected to be completed by March 2005.

We have already secured the land from the Orissa government and the equipment has already arrived, Mr Parakh said. Of the Rs 950 crore required, the finance director said, Rs 650 crore will be raised through long-term debt both in the domestic and foreign markets.

The split-up will be Rs 500-550 crore of domestic debt and Rs 150-100 crore through external commercial borrowings (ECBs). The company will tap the foreign market for its ECBs in the third quarter, Mr Parakh said.

The company is generating sufficient cash profits to take care of the balance requirement of funds to meet the gap in resource requirements for its capex plans, Mr Parakh said. Ferro-chrome is converted to chrome, which, along with nickel, are the two major inputs in stainless steel manufacture.

...Financial Closure For Indonesian Buy In 15 Days
Ajith K Pillai Mumbai, July 27: Jindal Stainless plans to achieve financial closure for its Indonesian plant within the next two weeks and all the formalities for its maiden overseas acquisition will be completed within 45 days, a company official indicated. The company acquired an Indonesia based 50,000 tonne cold-rolling plant for Rs 150 crore last week.

Jindal Stainless finance director Arvind Parakh told FE that the acquisition will be funded through a mix of equity and debt. Equity contribution will be to the tune of $8-10 million and the balance $22-24 million will be raised through debt from existing lenders or new lenders.

We will be tapping domestic institutions for our overseas acquisition on the business plan and the assets of the Indonesian company, Mr Parakh pointed out. It has already secured an in-principle approval from its lenders for the financing plan.

The foreign companys assets will be given to domestic lenders as collateral for seeking loans. We have approval from three to four lenders. The interest rates will be good. We are working out the financial structure of the financing plan, Mr Parakh noted.

Dwelling on the nature of the buy-out, the company official informed: We have floated a new company in Indonesia by the name of PT Jindal Stainless Indonesia. We are buying the assets of the company. The newly floated company will takeover the assets of the Indonesian company and then operations will start. We are awaiting necessary approvals from local authorities.