Essar Steel, a leading Indian integrated steel producer has raised $ 1 billion through long term export securitisation in order to pre-pay its existing rupee debt.
A statement from the company said that this follows the company’s strategy to dollarise its balance sheet. It had earlier raised $ 1 billion through the External Commercial Borrowings (ECB) route.
The company said the move helps it to de-risk its balance sheet as its revenues are dollar linked or dollar-denominated and hence provides a natural hedge for dollar denominated debt.
The company, with this financing, has dollarized $ 2 billion of its debt which, it said, has led to significant benefits. ``These 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.’’
``Bringing down interest cost and elongating maturity of our debt is a critical component of our strategy to enhance our competitiveness,’’ Mahadev Iyer, CFO & Director – Finance, Essar Steel said in a statement. ``We are uniquely positioned to securitize exports owing to our excellent track record in exports and excellent export potential.’’
The company said it had invested Rs 37,000 crore to set up a 10 million tonne steel plant in Hazira, Gujarat and the completion of its Odisha facility makes it one of the lowest cost steel facilities in the country.
