Essar Steel to raise $ 400 mn

MUMBAI, June 17: The Hazira-based Rs 2,528 crore Essar Steel is planning to raise $ 400 million from the overseas markets in the current fis...

MUMBAI, June 17: The Hazira-based Rs 2,528 crore Essar Steel is planning to raise $ 400 million from the overseas markets in the current fiscal to substitute its high cost domestic loans with forex loans and to meet its working capital requirements. The company has sought the permission of its shareholders in its next annual general meeting to increase their authorisation from $ 200 million to $ 400 million for the issue.

The company, which finished the fiscal 1997-98 with a net profit of Rs 24.70 crore, is expecting the fiscal 1999 to be better due to the stability in New Delhi, increased focus on infrastructure in the Budget, and imposition of anti-dumping duty on steel imports from the CIS countries.

The $ 400 million issue would be made to the foreign investors on preference share basis, the company said. Essar Steel is also planning to increase its authorised share capital to Rs 600 crore from the present Rs 500 crore. For the year ended March 1998, its paid up capital was Rs 330 crore and the networth Rs 2,414 crore.

Though is an alarming rise in key people going to Jindals and Ispat from Hazira, it has embarked on a capacity expansion plan at its coastal plant. Part of the proceeds from its $ 400 million overseas issue would be used to fund the expansion. The company is in talks with multinationals to sell its Vizag pellet complex. The project is expected to be completed by the year 2001. The Ruia company has also set up a 515 mw captive power plant in Hazira, which it later plans to hive off into a separate company.