Fis Agree To Reduce Interest Rate To Vishnupriya Steel

Financial institutions (FIs) have agreed to lower the interest rate and give a moratorium on loans for Shree Vishnupriya Steel, which is on the verge of being acquired by Jindal Vijaynagar Steel (JVSL).

Institutional sources said: "We will have to offer some lucrative options so that JVSL finds it viable to pick up the ailing steel plant. We will have to lower the interest rate on the loans of Shree Visnnupriya Steel to around 13-14 per cent." The current rate of interest on the loans of Vishnupriya is around 18 per cent.

The FIs are also looking at extending a moratorium on the loans given to Shree Vishnupriya, which JVSL will take over in its books. "The institutions will have to sacrifice something for the project to take off. The modalities are being worked out," said the FI sources.

Senior executives at JVSL said: "We are negotiating the financial terms and conditions of the deal with the FIs. We have already completed the due diligence exercise for the proposed acquisition." They, however, refused to divulge further.

Vishnupriya, which is based at Nandyal in Andhra Pradesh, has a substantial debt component. The company would also require additional funds to complete the 2.25 lakh tonne cold rolled coils project, the executives added.

The financial institutions, during the last year, had insisted the Jindals to acquire the ailing steel company due to its proximity to JVSL's hot-rolled project at Bellary. This is a part of the financial institutions' strategy to recover their investment in both the steel companies.