JSW Steel seeks shareholder consent for Rs 4000 crore QIP

MUMBAI: JSW Steel sought shareholders' approval to raise up to Rs. 4,000 crore through qualified institutional placement, the steelmaker said in a regulatory filing on BSE.

Proceeds of the issue will be used for capital expenditure and refinancing high-cost debt, besides meeting unlikely shortfall in unforeseen circumstances, the company said.

"It is in the interest of the company to raise long-term resources with convertible option to optimise capital structure for future growth," the JSW Steel wrote in a notice to shareholders. "The economy is poised for robust growth, backed by strong macroeconomic factors and government’s pro-growth policies," it added.

The company had a consolidated net debt of about Rs. 35,800 crore, as on March 31.

JSW Steel will be completing its brownfield expansion to reach 18 million tonne per annum (mtpa) capacity by the end of this fiscal. It has a strategic vision to reach 40-mtpa capacity by 2025 with significant investment in mineral resources such as iron ore and coal.

The company has moved an enabling resolution and sought shareholders' approval to raise Rs. 10,000 crore through debenture this financial year. Last fiscal, the company had raised Rs. 2,725 crore.

JSW Steel has chalked out a capital expenditure of Rs. 5,200 crore this fiscal and another Rs. 3,800 crore next fiscal to increase its steel making capacity. It plans to raise Rs. 3,200 crore through external commercial borrowings to fund its capex this fiscal. The company is focussing on brownfield expansion for now, given the weak business environment right now.

The company has had a tough last financial year with weakening steel prices and increasing influx of cheap Chinese steel into India. Its consolidated net profit of Rs. 62.38 crore for the quarter ended March, down 87% from Rs. 482.83 crore in the same quarter last year. The company will hold its annual general meeting on July 28, 2015.