Steel Exchange India Limited (SEIL) has released its financial results for the quarter ended September 30, showcasing a mixed performance with improved profitability despite a decline in revenue.

Key Financial Highlights

SEIL reported the following key figures for Q2:

Revenue and Profitability Analysis

The company experienced a quarter-on-quarter decline in revenue, dropping from Rs 29,999.89 lakhs to Rs 28,176.30 lakhs. Despite this decrease, SEIL managed to significantly improve its net profit, which rose from Rs 272.48 lakhs in the previous quarter to Rs 1,022.88 lakhs in the current quarter.

Corporate Actions

During the quarter, SEIL undertook several significant corporate actions:

1. New term loans: Secured Rs 1,500 crores in term loans from Kotak Mahindra Investment Ltd. and Oxyzo Financial Services Ltd. at a 12% interest rate.
2. Debt repayment: Used the proceeds from the new loans to prepay high-cost debt and repay Rs 843 crores of outstanding Non-Convertible Debentures (NCDs).

These actions suggest that Steel Exchange India is actively managing its capital structure and improving its financial position by refinancing high-cost debt with more favorable terms.

Conclusion

While the company faces challenges in terms of revenue growth, the significant improvement in net profit demonstrates SEIL's ability to enhance operational efficiency and financial performance. The management's focus on debt restructuring indicates a proactive approach to strengthening the company's financial position.

Steel Exchange India , a prominent integrated steel manufacturer in South India, has announced a significant financial restructuring that promises to substantially reduce its borrowing costs and improve its financial position.

Refinancing Deal Details

The company has successfully secured a ₹350 crore refinancing facility from a consortium of leading financial institutions, including Kotak Mahindra Investments Limited, Oxyzo Financial Services Limited, and Kotak Credit Opportunities Fund. This new arrangement is set to replace existing high-cost debt, resulting in a notable reduction in the company's interest expenses.

Key Financial Benefits

• Interest Rate Reduction: The refinancing deal is expected to lower Steel Exchange India's borrowing costs by approximately 5.50% from the previous rate of 18.75% per annum.
• Extended Repayment Tenure: The new facility offers an extended repayment period of five years, up to September 2030.
• Improved Cash Flow: The company anticipates generating cumulative additional cash flow of approximately ₹130 crore until FY2028 due to the improved terms.

Implementation of the Refinancing

Steel Exchange India has already utilized ₹150 crore of the sanctioned amount for the following purposes:

• Prepayment of a ₹25 crore Term Loan
• Full pre-redemption of Secured unlisted Non-Convertible Debentures (NCDs) worth ₹84.30 crore
• Partial redemption of secured Listed NCDs amounting to ₹32.35 crore

The remaining ₹198.56 crore of outstanding Listed NCDs are scheduled to be acquired by Kotak Credit Opportunities Fund, subject to requisite approvals.

Strategic Impact

This refinancing initiative is expected to have several positive outcomes for Steel Exchange India:

1. Optimization of the capital structure
2. Enhanced liquidity position
3. Improved shareholder value through reduced finance costs

Management's Perspective

Mr. Suresh Kumar Bandi, Joint Managing Director of Steel Exchange India Limited, commented on the development: "These steps reflect our continued focus on strengthening the Company's financial foundation. The sanctioned refinance facilities at lower cost for repayment of existing high-cost debt will ease our interest burden, improve cash flows, and provide us the flexibility to support growth. This proactive financial management positions us well to pursue our long-term business objectives with greater confidence."

Company Overview

Steel Exchange India Limited, part of the Vizag Profiles Group, is known for its 'SIMHADRI TMT' brand of rebars. The company operates an Integrated Steel Plant & Power Unit near Visakhapatnam, with facilities for sponge iron, billet, rolling mill, and captive power generation.

Steel Exchange India reported the following financial metrics:

This refinancing deal marks a significant step in Steel Exchange India's journey towards improved financial health and operational efficiency, potentially setting the stage for future growth and expansion in the competitive steel manufacturing sector.