JSW to raise Rs 9,000 cr in 18 months

Steel tycoon Sajjan Jindal's power company, JSW Energy, will borrow around Rs 5,000 crore (Rs 50 billion) in the coming year and a half, in addition to around Rs 4,000 crore (Rs 40 billion) to be raised from the market and through internal generation, for building 3,000 Mw of generation capacity, transmission infrastructure and mining projects.

JSW Energy aims to generate 11,390 Mw in the country by 2015. The company has tied up with two consortiums of lenders, led by IDBI Bank and State Bank of India, respectively, for the loans. It had recently filed a draft red-herring prospectus for a Rs 3,000 crore (Rs 30 billion) public offering with market regulator Securities and Exchange Board of India.

The company plans to dilute 10 per cent of its equity through fresh issue to the public, said a top company official.

"Of the Rs 14,048 crore (Rs 140.48 billion) requirements for the projects under implementation, the company has tied up for Rs 9,900 crore (Rs 99 billion) debt so far. Two lenders' consortiums have already disbursed Rs 4,038 crore (Rs 40.38 billion) till June this year. About Rs 5,000 crore (Rs 50 billion) will be disbursed within the next 15-18 months, as the projects progress," said JSW Energy joint managing director and chief executive, S S Rao, and chief financial officer Pramod Menon.

The remaining Rs 4,148 crore (Rs 41.48 billion) will be generated internally as contribution towards equity, consisting of roughly equal contributions from the equity raising issue and internal accruals.

It is also looking to offer about one per cent stake to its group employees' trust in a pre-IPO placement. At present, the promoters and promoter group companies, including listed companies JSW Steel and JSW Holding, are jointly holding 92 per cent stake in the company. The remaining eight per cent is with Mauritius-based companies Steel Traders Ltd and Indus Capital Group Ltd.

Till March 2009, the company had deployed Rs 6,674 crore (Rs 66.74 billion) for its power projects in Rajasthan, Karnataka and Maharashtra. The investment includes debt of over Rs 5,900 crore (Rs 59 billion). For most of the projects, the company raised funds at a debt-equity ratio of 75:25.

The consolidated revenue was Rs 1,852 crore (Rs 18.52 billion) in the last financial year, supported by the cash flow from its two projects, with 560 Mw capacity, near its largest steel plant at Vijayanagar in Karnataka.

Five projects are either in the construction or implementation phase and another four are in the development stage. In transmission, the company has a joint venture with Maharashtra Electricity Transmission Company for evacuating power from JSW's plant at Ratnagiri. The company is also investing in lignite mining at Barmer in Rajasthan for firing its power plant there.