Essar Steel, an integrated steel producer, has raised $ 1 billion through long-term export securitisation...
Essar Steel, an integrated steel producer, has raised $ 1 billion through long-term export securitisation in line with its strategy to dollarise rupee debt in order to reduce its average interest costs and elongate the average maturity of debt.
The move follows a similar exercise undertaken last year when it had raised $ 1 billion through the External Commercial Borrowing (ECB) route.
With this financing, Essar Steel has now dollarised $ 2 billion of debt resulting in significant benefits. According to the company, the benefits include reduction in the average interest cost from rupee linked rate to dollar linked rate, which has resulted in a large interest saving of approximately Rs 720 crore annually, and elongation of the average maturity of its debt from 3.5 to 6.75 years.
The Ruias-promoted company believes that the move would also help it to de-risk its balance sheet as its revenues are dollar linked or dollar denominated.
Mahadev Iyer, CFO & Director (Finance), Essar Steel India said that the company is uniquely positioned to securititse exports owing to our excellent track record in exports and excellent export potential.
The company has a long term debt of about Rs 29,000 crore, of which 58% is rupee-denominated debt and the rest has been dollarised.