Steel Authority of India plans to raise up to Rs. 5,000 crore debt this fiscal by issuing secured non-convertible debentures or bonds in tranches to part-fund its capital expenditure.
“A sum of Rs. 9,000 crore is planned to be spent during the current financial year 2014-15. In order to part finance this expenditure, your company plans to borrow about Rs. 5,000 crore during the year,” SAIL said in a notice to shareholders ahead of the company’s annual general meeting (AGM).
“On analysis of the various options of raising funds through borrowing in domestic and international markets, it has been decided by the Board of Directors to raise the funds through private placement of secured non-convertible bonds/debentures to the extent of Rs. 5,000 crore during the year,” it added.
The state-owned steel maker is in the midst of expanding its crude steel production capacity to 21.40 million tonnes per annum (mtpa) from 12.84 mtpa earlier with Rs. 72,000 crore investment. The investment also includes enhancing production from its captive mines.
The expansion programme is being funded through a mix of debt and equity. SAIL had Rs. 25,281 crore debt as on March-end this year.
The debt-equity ratio of the PSU steel maker, as on March-end, stood at 0.59:1 against 0.53:1 as on March-end of the previous year. The rise is mainly on account of increase in borrowings during the year to meet the capex requirements.
The company had spent Rs. 9,890 crore on capex in the previous fiscal. SAIL has already spent about Rs. 53,270 crore on the expansion programme till April this year. Orders for about Rs. 59,288 crore have been placed and facilities of about Rs. 22,000 crore have been already operationalised.
SAIL also plans to ramp up capacity further to 50 mtpa by 2025 entailing investments of Rs. 1.5 lakh crore.
The proposed capacity expansion to 50 mtpa is in line with government’s vision of enhancing India’s steel-making capacity to 300 mtpa by 2025, from around 100 mtpa at present.
