Financial Express reported that the Essar Steel, which is reeling under a debt burden of INR 23,500 crore, has asked its board to explore the possibilities of raising up to INR 3,000 crore via convertible debt instruments from domestic and overseas markets.
According to the filing with the registrar of companies, the decision to this effect was taken at the company's annual general meeting on October 20th.
Essar Steel in the filing said that "The company is looking at various alternatives in India and in international markets for long term fund raising through equity, bond or any other form of hybrid securities to replace its high cost debts."
The filing said that "The modalities of such issues are under consideration of the management. The company is approaching various agencies, investors and financial institutions for the purpose.
In 2011-12, the company completed its expansion of the Hazira steel plant to 10 million tonne per annum. However, the expansion has taken its toll on the company. The company's interest costs rose 68% to INR 2,235 crore.
In total, Essar Steel has invested INR 37,500 crore at its Hazira plant since 1989. The plant that produced 7 million tonne of flat steel in 2011-12 is expected to reach its full capacity by 2013-14.
