The country's largest steel producer, Steel Authority of India (SAIL), is mulling issuing fresh equity by way of follow-on public offer (FPO) to part finance its Rs 70,000-crore expansion project.

"We may look at issuing additional equity to part fund our capital expenditure," SAIL Chairman S K Roongta told reporters here today after announcing the first quarter results of the company.

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SAIL shares today ended the day at Rs 175.65, up 3.26 per cent over the previous close on the Bombay Stock Exchange.

However, Roongta did not specify any time-frame for the FPO.

FPO is a way of raising funds by offering additional shares after a firm has had an initial public offering.

The firm has a capital expenditure programme of about Rs 10,300 crore for the current fiscal, half of the amount would come from debt.

A sum of Rs 1,300 crore has been raised during the first quarter itself. The company hopes to maintain a debt-equity ratio of 1:1 in the current fiscal.

Meanwhile, in a written reply to the Lok Sabha, Minister of State for Steel A Sai Prathap said that SAIL has an outstanding loan of Rs 8,796.87 crore as on June 30, 2009, and would be repaid in full by the year 2042.

"The loan burden is expected to go up during the implementation of (expansion) projects," he added.

SAIL is in the process of expanding its annual production capacity to about 23 million tonnes by 2012 from the present 14 million tonnes. Roongta said that the company "is firming up plans to take it to 26 million tonnes" thereafter.

With pace of projects under expansion picking up, the capital expenditure during the quarter at Rs 2,469 crore was more than three times higher than incurred in Q1 of fiscal 2008-09.

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