PTI reported that Essar Shipping is planning to convert around INR 800 crore of total INR 5,500 crore debt into dollar loans to bring down the interest burden.
Mr AR Ramakrishnan MD of Essar Shipping said that "We are planning to convert around INR 800 crore of our rupee loans into dollar debt to pare our financing cost. We are talking to some domestic and foreign banks directly for this. We had INR 5,500 crore debt as of the September quarter."
When asked how soon the conversion will happen, he said that it may take a couple of months and explained that the objective is to convert some big ticket loans in the range of INR 700 crore to INR 800 crore into cheaper dollar loans.
Whether the company has appointed some merchant bankers for this, Mr Ramakrishnan said that the company, which is facing cash flow issues due to the general slowdown in the shipping industry, will directly deal with the lenders and does not plan to go to i-bankers.
Many domestic companies are raising dollar loans which are much cheaper today to repay their rupee loans to pare their interest burden.
In the light of the high interest rate regime, the government recently allowed companies to raise more foreign loans through ECBs and other instruments.
The Ruias promoted Essar Group that includes Essar Oil, Essar Steel and Essar Ports is sitting over a debt pile of over INR 80,000 crore as of the September quarter.
He said that the margins are still depressed and it will improve only when the economy rebounds. The freight rates are expected to be depressed at least till the middle of 2013 when new ship deliveries ease.
