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JSW Steel plans to raise $500-600 million (₹3,500-4,100 crore) through issue of dollar bonds to part-finance its expansion plans.
The bond issue is expected to be announced early next week as the tenure, pricing and finer details are being finalised, said a merchant banker who is in the know of the development.
The road-show for the bond issue should begin by Tuesday, he added.
Brownfield expansion
The company had embarked on a massive brownfield expansion programme with an investment to ₹44,400 crore by March 2020. The investment will create additional capacity of 6.6 million tonnes of crude steel and 3.3 million tonnes of downstream capacity.
JSW Steel will invest ₹15,000 crore this financial year and ₹14,687 crore in the next. Post the brownfield expansion, its capacity will go up to 24.6 million tonnes a year from 18 mtpa.
JSW Steel is taking several measures to rein in cost. It is commissioning an 8 mtpa pellet plant, a coke oven plant of 3 mtpa and a waste heat recovery boiler of 175 MW. The company has started iron ore mining from three captive mines in Karnataka and reduced dependence on imports and purchases from Odisha mines.
The company recently tied-up $700 million (₹4,900 crore) by signing the largest-ever trade finance for supply of steel over the next five years to Duferco International Trading Holding SA, a global steel trader and distributor.
The financing structure with Duferco International provides JSW long-term funding to complement its plans for future growth secured by committed exports of steel products to DITH.
Both the dollar bond and the trade financing will help JSW Steel fund expansion without much stress on its balance sheet, said an analyst.
Moreover, a committed export order will act as a natural hedge on the dollar funding and protect the exposure from rupee-dollar volatility, he said.
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