Giving up to the increasing pressure from lenders to repay debt, Essar Steel has decided to sell assets worth Rs.11,200 crore by March 2016.
Chinese oversupply and falling steel prices in domestic market finally took toll on Essar Steel along with many other Indian steel mills.
In order to raise funds to repay its debt, Essar Steel has appointed ICICI Securities and SBI Capital Markets as advisers to help it to sell stake worth Rs.11,200 crore.
It is also reported that apart from this promoters will be infusing Rs.1,500 crore in to the company to repay lenders.
“Major steel companies across the world are taking suitable steps to cut costs and raise money. India is no different,” Essar Steel quoted in its website. “It is in this context that Essar Steel has taken a proactive decision to induct strategic/financial investors into the company,” it said.
The situation is tough for Essar Steel since last three years. It is currently dealing with falling steel prices, lack of supply from Kirshna-Godavari basin and impact of an explosion at Kirandul-Vizag pipeline by Naxalites in 2011.
Essar Steel is not alone in crisis. Many steel biggies such as SAIL, Tata Steel, JSW Steel have been dealing with issues of cancellation of coal mines, steel oversupply from China, and falling domestic steel prices.
China’s exports jumped 27% Y-o-Y to 83.11 MnT and is expected to touch 100 MnT by year end.
Although India imposed 20% safeguard duty on steel imports, Chinese offers still stands to be cheaper than domestic prices.
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