Rashtriya Ispat Nigam to raise Rs 22,500-cr debt

In talks with BHEL and SAIL for joint ventures.

Rashtriya Ispat Nigam Ltd (RINL) is gearing up for Rs 22,500 crore debt to finance its expansion plans of reaching 11.5 million tonnes (Mt) from current 3 Mt by 2015-16.

PK Bishnoi, chairman and managing director, RINL said, “We need about Rs 35,000 crore for expansion. We will raise Rs 22,500 crore as debt, Rs 2,000 crore from cash and cash equivalents and the rest will come from our own internal accruals, initial public offer (IPO) and possible joint ventures with BHEL and SAIL.”

To reach 6.3 Mt from the current capacity of 3 million tonnes, RINL has earmaked an investment of Rs 12,300 crore, of which Rs 8,300 crore have been spent. RINL is amidst the commission of a 3 million tonnes capacity in the current financial.

Bishnoi said the blast furnace will be fired in 2-3 months time. One mill will also get commissioned in 2-3 months and two other by the end of December and early next year.

By 2011-12, RINL will become 6.3 Mt company, Bishnoi added.

He said, “We are also doing repairs of the existing two blast furnaces and adding modern cooling systems to it. That will increase the capacity of the blast furnaces by 1 Mt, ie 7.3 Mt of steel capacity.” For this, the company needs Rs 7,000 crore and has already spent Rs 1,000 crore. “To reach 11.5 Mt from 7.3 Mt, the company plans to spend Rs 25,000 crore over the next five years,” he said.

The company has already appointed a consultant to conduct studies to reach 11.5 Mt capacity whose report is expected in two months time. “And after that, we haven’t chalked out the plan but the broader outline is to be a 20 Mt capacity by 2020-21.”

Bishnoi met close to 50 banks in Mumbai on Saturday and discussed what should be the structure of the debt, in terms of loan, new instruments, foreign currency loans, among others.

RINL hopes to gather Rs 10,500 crore needed for the expansion from its internal accruals, IPO and the possible JVs with BHEL and SAIL. Bishnoi said the government is yet to take a call on the IPO.

However, on the partnership with BHEL, Bishnoi said the details have not been listed out as yet. He said, “But, the ballpark figures are: the seamless tube mill will cost around Rs 2,500 crore. The silicon mills will be around Rs 3,000 crore. So, Rs 5,500 crore would be where BHEL would be possibly partnering. So, of Rs 5,500 crore, 50 per cent stake would be of BHEL. But, we haven’t worked it out on the detail yet.”

“With SAIL, what we are conceiving and what we are telling them is that the 4 Mt that we are putting up, we can do that in a joint venture where SAIL will supply us the iron ore.” The talks are in a nascent stage and Bishnoi did not wish to comment further.

He said, “BHEL is more likely to happen, SAIL is further down the line. Therefore, we need to go up to 11.5 Mt and that is why we have hired a consultant and are working on the project. In the meantime, the discussions with BHEL and SAIL are on and even in that, the chances are that BHEL possibly will join us.”