Expecting an increase in funding requirement for its ambitious expansion plans, JSW Steel has sought shareholders' approval to raise its borrowing limit by up to 60 per cent to Rs 40,000 crore.
The Sajjan Jindal-led steel maker, which currently has 14 million tonne per annum (mtpa) capacity, intends to raise the limit for various capex programmes including acquisition, JSW Steel said in a notice for its annual general meeting (AGM) with shareholders.
JSW Steel's AGM is scheduled on July 30.
The company has a borrowing limit of Rs 25,000 crore. On the other hand, it had Rs 21,346 crore consolidated debt at the end of fiscal year 2012-13. It excludes Rs 6,500 crore debt of JSW Ispat, which was merged with the firm few weeks ago.
The aggregated debt coupled with the company's proposed expansion and acquisition plans is expected to have propelled the firm to seek shareholders nod for a Rs 15,000 crore hike in the borrowing limit.
JSW intends to jack up capacity of 10 mtpa Vijayanagar plant in Karanataka by an additional 2 mtpa. Besides, work is in progress on a new steel mill in West Bengal. These two plans would entail an investment of over Rs 20,000 crore.
Shareholders had in 2010 okayed increasing JSW's borrowing limit to up to Rs 25,000 crore.
"Taking into consideration the requirement of additional financial resources to meet the company's capital expenditure programmes...the said limit of Rs 25,000 crore in excess of the aggregate of the paid-up capital of the company and its free reserves, is utilised to a considerable extent," JSW Steel said in its latest annual report.
"It is, therefore, proposed to increase this limit from the existing Rs 25,000 crore to Rs 40,000 crore...," it added.
On a consolidated basis, JSW Steel's net-debt gearing was at 1.11, as on March-end, compared to 0.98 at the end of the previous fiscal year.