ArcelorMittal Nippon Steel India, a joint venture between global steel giants, is actively pursuing discussions with multiple banks to secure a loan of approximately Rs 8,500 crore ($1 billion). This strategic move aims to fuel the company’s ambitious expansion plans, potentially marking the largest local-currency loan of the year.
Sources familiar with the matter disclosed that the State Bank of India, ICICI Bank, and Axis Bank are among the key lenders engaged in this syndicated deal. The funds raised through this loan will be directed towards capital expenditure, strengthening the firm’s operational capabilities. While specific details of the lending facility are yet to be finalized, it is anticipated that SBI, India’s largest bank, may contribute more than half of the loan amount. The loan is expected to have a tenor exceeding five years and could be priced against a local interest rate benchmark.
If successful, this loan would represent the most substantial rupee-denominated financing in 2024 thus far, according to Bloomberg data. As India gears up for potential infrastructure spending in the aftermath of Prime Minister Narendra Modi’s anticipated re-election, ArcelorMittal Nippon Steel India is strategically positioning itself to capitalize on emerging opportunities.
Despite repeated attempts, ArcelorMittal Nippon Steel India, State Bank of India, ICICI Bank, and Axis Bank have refrained from providing comments on the ongoing discussions.
Previously, the steel firm engaged in loan talks with other lenders; however, disagreements over funding costs led to an impasse, insiders revealed.
The joint venture between ArcelorMittal South Africa Ltd. and Japan’s Nippon Steel Corp currently stands as India’s fourth-largest flat steel producer, boasting an annual capacity of 8.8 metric tons as of March 2023, as reported by Crisil Ratings, a local credit risk assessor.
India’s steel demand is predominantly driven by sectors such as building and construction (39%), infrastructure (27%), engineering and packaging (21%), and automotive (12%), according to a Bloomberg Intelligence analysis. Strengthening the steel industry is crucial to supporting the country’s growth across these sectors.
The potential infusion of funds through this loan would not only facilitate ArcelorMittal Nippon Steel India’s expansion plans but also contribute to India’s industrial development, particularly in critical sectors like infrastructure and construction. As the steel demand continues to surge, this move aligns with the nation’s objectives of enhancing domestic manufacturing capabilities and fostering economic growth.
