ArcelorMittal Nippon Steel (AM/NS) India, a joint venture between two leading steel companies, is in talks with banks to secure a loan of approximately Rs 8,500 crore ($1 billion). This loan, if finalized, would be the largest local-currency loan in India this year and would be used to fund the company's expansion plans.
Several banks, including State Bank of India, ICICI Bank, and Axis Bank, are expected to participate in this syndicated loan. The loan would have a tenor exceeding five years and be priced against a local interest rate benchmark. The specific details of the loan are still being finalized and may change.
If the deal goes through, it would be the largest rupee-denominated loan in India in 2024. AM/NS India, the country's fourth-largest flat steel producer, is seeking to increase its capacity in anticipation of increased infrastructure spending following Prime Minister Narendra Modi's expected re-election.
The company had previously held loan discussions with other lenders, but they were unable to reach an agreement on the cost of funding. AM/NS India is a joint venture between ArcelorMittal South Africa Ltd. and Japan's Nippon Steel Corp. It has an annual capacity of 8.8 million metric tons as of March 2023.
The construction industry accounts for 39% of India's total steel demand, followed by infrastructure (27%), engineering and packaging (21%), and automotive (12%).