Tata Iron & Steel Company (Tisco), which is one of the lowest cost producers of steel in the world on an operating cost basis, is in talks with lenders for refinancing certain high-cost debts of the company.

In an interview with FE, Tisco vice-president (finance) RC Nandrajog said that it would be good if refinance of high debts could be done with cheaper debts, though it would be a lot easier if there are put and call options. "We have done some refinance and are in discussions with some big lenders in this regard." He added: "There are, however, some debts that are not of such high costs."

Refinance is a part of the company’s ongoing efforts to bring down its interest costs, commented industry analysts.

Tisco has been effectively utilising the low-interest regime prevailing in the country, and has reduced its interest costs by 21 per cent to Rs 76.08 crore in the third quarter of the current fiscal.

Tata Steel, as on March 31, 2002, had Rs 4,056.93 crore of secured debts on its books, while the unsecured debts amounted to Rs 650.89 crore. According to Tisco’s 2001-02 balance sheet, some of the company’s debts had interest rates as high as 18 per cent.

The Tisco management expects that stable steel prices, further improvement in product-mix, cuts in operating costs and a reduction in financing costs should ensure a healthy financial performance. "We believe that we are in a position to reduce operating costs by about two-three per cent in a like-by- like comparision. Tisco is looking to improve its profitability, improve shareholder return and would like to produce a richer product-mix. We would also like to cut our production costs," said Mr Nandrajog.

With regard to the various mining ventures that Tisco is exploring, Mr Nandrajog said: "We are looking to leverage our mining strength. We are into coal, iron ore and are looking into titanium at present." With regard to the joint venture company of Tisco and South Africa Industrial Development Corporation for setting up a ferro-chrome unit in South Africa, Mr Nandrajog said that the environment impact analysis hearing has been completed — which went very well — and the second and final hearing will be completed by June-July this year.

"Once that is through, things will proceed further," he added.

While the company has decided not to invest in telecom and aluminium, investment in other non-steel businesses is not in the offing now.