Many willing to fund VSP expansion

VISAKHAPATNAM: There seems to be an encouraging response to the notice issued by Visakhapatnam Steel Plant for expression of interest (EoI) by banks/financial institutions to provide finance to the tune of Rs. 2,500 crores for its expansion project.

A good number of banks/financial institutions have submitted proposals conveying their willingness to fund the expansion programme anticipating its clearance at the earliest by the Union Cabinet.

Foreign banks like HSBC, Citibank, Caylon and Indian public sector banks like the State Bank of India, SBI Capital Markets, its associate banks and Punjab National Bank, IDBI Bank and ICICI Bank have responded to the notice on EoI.

A delegation from ABM Amro visited VSP and gave a presentation on their track record.

The deadline set for submission of EoI is March 31. "We are evolving the guidelines to find out which bank/consortium is most suitable to meet our requirements,'' the VSP Additional General Manager (Finance and Accounts), K.S. Shankar, told The Hindu .

Net profit

The success in making a turnaround after avoiding the threat of reference to Board for Industrial Finance and Reconstruction (BIFR) is the main reason for such an overwhelming response to give loan to VSP.

The company has been registering net profit from 2002-03 and it became a debt-free company last year. According to VSP sources, the company's projected net profit for 2004-05 is over Rs. 2,000 crores.

VSP has prepared a plan to expand its capacity from three million tonnes (mt.) to 6.3 mt. liquid steel by 2007-08. Further expansion plans are also on the anvil as the plant has been designed to produce 10 mt.

The project report, prepared by M.N. Dastur and Company says that the expansion plan requires Rs. 8,250 crores and three years for completion.

The company already has about Rs. 3,000 crores invested in fixed deposits. The company proposes to raise about Rs. 2,500 crores by way of debt i.e. loans/debentures etc., both in Indian rupees and foreign currency.

Tenure of debt

The proposed tenure of the debt is likely to be five years. Proposals for either lending or arranging the amount on their own or by way of a consortium will come under scrutiny after obtaining the Cabinet clearance.

Recommended for you