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PrintEssar Steel has said it hopes to raise USD 2 billion through pre-export finance by the end of the current financial year to retire part of its rupee debt, a company official has said.
Pre-export funds are borrowed against confirmed orders from foreign buyers.
"At present, we are in talks with financial institutions. We hope to raise the money by the end of the financial year," an Essar Steel official told PTI.
Earlier, the company had said it planned to raise USD 2 billion through pre-export finance to retire rupee-denominated debt, which will ensure at least Rs 850 crore of annual savings through lesser interest outgo.
The company has around 20,000 crore debt on its books and a significant portion of it is rupee-loans.
The official said that recent rupee fluctuation will not impact its future fund raising plans in dollar terms as it has natural hedge against the forex fluctuation.
When a company exports and imports, it is said to have natural hedge as any rise in import price due to fall in the rupee gets compensated through gain in exports.
According to the firm, interest cost will come down through refinancing of debt from around 12.5 per cent to 6-7 per cent.
"Not only the interest cost will come down, this will also help us increase the tenor of these loans," the official said.
The firm had already raised USD 1 billion through external commercial borrowings (ECB) in June with an annual cost saving of Rs 450 crore.
Essar Steel has a capacity of 14 million tonne per annum with presence in India, Canada, the US, the West Asia and Asia.
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