Essar Steel has come out of the purview of CDR. It has repaid the entire CDR debt. At the time of the Corporate Debt Restructuring package approved by the Company's lenders in October 2002, the debt under the CDR was Rs. 2800 crores. It has since repaid CDR lenders within four years as against a CDR tenure 12 years. In the process, it has brought down the average interest cost from 11.6% to between 8 and 9% per annum.

It may be recalled that Essar Steel had fully repaid the UTI debt of Rs. 927 cr. Essar Steel has been working on reducing its finance cost for some time now. The average cost of funds of Essar Steel under the CDR program was 11. 6%. It had planned to be out of CDR net by March, 2006.

On the operations front, Essar Steel went through a rigorous program to improve efficiency and productivity. It included acquisition of Hy Grade Pellets Limited which operates a 4 million tonne pellet plant at Visakhapatnam and Steel Corporation of Gujarat Limited which operates a 1.2 million tonne cold rolling complex at Hazira. With these acquisitions, Essar Steel has become a fully integrated steel plant. The notable point of these acquisitions is that it is financed out of equity and not through debt. Similarly, it has embarked on a program to expand steel making capacity from 2.4 million tones to 4.6 million tonne, which is expected to be completed during the current year. The cost of this expansion is expected to be in the region of Rs. 2000 crore, which is substantially lower than Greenfield capacity of a similar nature. These measures will strengthen the operational efficiency of Essar Steel further and bring it among the lowest cost producers in the world.