The Hindu Business Line : Mukand to reduce debt-equity ratio after land sale

The Managing Director, Mr Niraj Bajaj, said that the land deal would see interest-cost savings of Rs 40 crore. He added that the debt-equity ratio would be reduced to 1:1. The company may also consider surplus land sale at Kalwa later, he said. Excerpts from CNBC-TV18's exclusive interview with Mr Bajaj:

After the repayment of debt (with the proceeds of this land sale and debt restructuring), to what level will your quarterly interest payment would go down?

We expect it to go down to about Rs 17-18 crore per quarter, which would be a major saving in the interest cost, because not only will the debt reduce, we may also be able to refinance some of the debt at lower cost.

If you do end up saving about Rs 40 crore annually on interest cost, what kind of earnings per share (EPS) will you end the year with?

This is difficult to predict, but we are on track and in every quarter, our results have been improving.

We hope to do dramatically better than we did last year, especially with the operational profits on one side and the one-time land sale benefit.

What is your outstanding debt and are you going to use this entire amount to pay off some of your debt?

Yes, that is right. We have ongoing expansion plans right now of Rs 120 crore.

We will also use these returns to reduce our debt and clear internal accruals every month.

So we do expect that about Rs 200-Rs 250 crore of debt will be reduced in the next 3-4 months. This is where we are focusing to bring our debt-equity ratio down to 1:1.

Will this amount come to you in instalments? How does that work on a monthly or quarterly payment basis?

The entire amount will come to us before end of January 2006, which is only by next month and that will be in instalments.

It may even come earlier but the last date is January 31, 2006.

Do you have any other land to sell in Mumbai?

We have land; a 100 per cent subsidiary in Vidyavihar but that will come up later. As far as Mukand is concerned, there is no other major piece of land.

We do have land at Kalwa where our steel plant is located— a lot of which is surplus. So we may consider selling that at a later date.

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