The board of Steel Exchange of India has approved fund raising of up to Rs 700 crore, the company said in an official statement. The company has also received an upgradation in its credit ratings, which is likely to help manage the raised funds, the company said in its regulatory filing.
Steel Exchange of India’s board has approved the fund raising of Rs 700 crore, the company said in its regulatory filing. It added that the proposed fund raising may be undertaken through different instruments, including equity-linked instruments, debt instruments, etc.
Steel Exchange of India: Proposed fund raising
The company added that the proposed fund raising worth Rs 700 crore is subject to requisite statutory and regulatory requirements and may be undertaken through various permissible instruments.
These include equity shares, equity-linked instruments, debt instruments, convertible equity warrants, convertible securities, non-convertible debentures, and any other combination as permissible under the law.
Commenting on the fund raising, the promoter and Managing Director of Steel Exchange of India said: “The Board’s approval for fund raising reflects our continued focus on strengthening the company’s financial foundation for growth and expansion plans for producing environmentally and more economically sustainable products. Refinancing of existing high-cost debt at lower interest rates will ease our interest burden, improve cash flows, and provide flexibility to support future growth.”
Utilisation of funds
The steel manufacturer added that the raised capital will be utilised towards bolstering the company’s financials by helping strengthen its balance sheet, enhancing financial flexibility, and also supporting its long-term growth initiatives.
The proposed fund raising will also provide support to the company’s growth and expansion plans, including entry into speciality steel products under the Production Linked Incentive (PLI) Scheme.
Steel Exchange of India’s credit rating upgraded
Additionally, the company disclosed that it has received an investment-grade credit rating status, as credit rating agency Infomerics Valuation and Rating (IVR) has upgraded the company’s loan facilities worth Rs 398.56 crore.
The company’s listed non-convertible debentures worth Rs 198.56 crore have been upgraded to the BBB- rating from its previous BB+ rating.
While the rating for the company’s long-term bank facilities—term loans worth Rs 150 crore—is yet to be assigned, as of now they have a BBB- rating.
IVR has also upgraded its rating for the company’s short-term bank facilities, including letters of credit worth Rs 40 crore, to A3 from its previous rating of A4+.
The rating for cash credit worth Rs 10 crore now stands at BBB-, up from its previous rating of BB+.
However, it is important to note that the previous ratings were given by CareEdge Ratings, and the upgraded ratings have been assigned by Infomerics Valuation and Rating.
The company said that the improved rating will help lower its borrowing costs and help in efficient management of fund raising and working capital.
Steel Exchange of India: Share Price
Following these announcements, the company’s share prices were down 1% in the intraday session. Over the past one month, the company’s stock has delivered a return of nearly 7%.