Essar Ports today announced that it has refinanced its debt in a subsidiary Essar Bulk Terminal Limited Hazira through a takeout finance scheme of India Infrastructure Finance Company Limited (IIFCL). Essar Ports has availed the takeout finance scheme to reduce its interest rate by over two and half per cent on Rs 405 crore which is part of debt taken for building its 30 million tonne capacity bulk terminal at Hazira in Gujarat.
The takeout finance scheme by IIFCL for infrastructure projects, is a government initiative wherein an infrastructure project, on commissioning, can replace some of its costly domestic rupee debt with finances from IIFCL.This lowers the interest burden on infrastructure projects and facilitates incremental lending to the infrastructure sector by freeing up the capital of banks.
The company, which has a total debt of about a billion dollars, could further explore availing the benefits of such a scheme for cutting the cost of its infrastructure project, Vadinar Port Terminal, a 12 million tonne all weather deep draft facility which is located in Gujarat.
Speaking about the development, Mr. Shailesh Sawa-Director Finance, Essar Ports Limited said, “ As part of our constant endeavour to reduce the cost of debt, we have availed the government initiated scheme of takeout finance. This will reduce our cost of debt and we will undertake more such initiatives to deliver better returns to our shareholders .”
Earlier this year, Essar Ports entered into a strategic alliance with Port of Antwerp receiving an equity infusion of Rs 175 crore at approx Rs 100 per share. The proceeds from this transaction was used to reduce the company’s debt. The company’s policy this year has been to reduce interest costs. For the quarter ended June 2012, Essar Ports also reported 73% increase in net profit after the company handled its highest ever cargo of 12.65 million tonnes during the quarter.
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Dredging Today Staff, September 21, 2012;