JSW Steel to refinance Rs 75 bn Ispat debt in 9 months

MUMBAI (makemystocks): JSW Steel Ltd will refinance Ispat Industries Ltd's Rs 75 billion debt in the next nine months to lower interest costs and subsequently make a grand turn around the loss-making company.

"We will bring down costs to much favourable levels by repaying loans of the existing lenders and taking fresh loans at lower rates by leveraging JSW brand," Sajjan Jindal, vice-chairman, JSW Steel informed.

Refinancing will help reduce the cost of company's debt 3-4%, he said.

The primary lenders of Ispat Industries are IDBI, IFCI, ICICI Bank and State Bank of India, Jindal said.

In Jul-Sep, Ispat Industries' interest costs stood at Rs 2.64 billion. It also reported loss of Rs 3.31 billion.

Group Chief Financial Officer and Joint Managing Director Seshagiri Rao said JSW Steel expects Ispat Industries to be earnings before interest, tax, depreciation and amortisation positive in Jan-Mar.

“We are expecting EBITDA of Rs 4,000 per 1 tonne by 2011-12,” Rao said.  

Further, the company plans to infuse around Rs 31 billion in Ispat Industries for capital expenditure in three to four years, Jindal said.

"The funds will be used for setting up captive power plant and coke oven, taking capacity to 4 million tonnes per annum," he said.

Ispat Industries currently has capacity of around 3 million tonne a year.

JSW Steel is aiming at 50 million tonne production capacity by 2020.