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Essar Steel raises $1 billion through long term export securitization

25 Nov 2014 Evaluate

In a bid to pre-pay existing rupee debt, Essar Steel has raised $1 billion through long term export securitization. The company had earlier raised $1 billion through external commercial borrowings (ECB) route. With this financing, the company has dollarised $2 billion of its debt which has led to significant benefits.

The move was prompted by reduction in average interest cost from the rupee linked rate to the dollar. The conversion is estimated to save an interest to the tune of Rs 720 crore annually on elongation of the average maturity period of its debt from 3.5-6.75 years. It will help Essar Steel 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.

Essar Steel, as part of its business activity of steel manufacturing has a gas plant which produces oxygen, nitrogen, and argon gases, while Inox Air Products is engaged in the business of manufacturing and supplying industrial gases across India.

 

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