Tata Steel to borrow up to Rs 14,000 cr to fund expansion
Jun 17 2014 , Mumbai
A committee constituted by the board members proposed to seek shareholder approval through postal ballot for further issuance of privately placed debt securities (convertible into equity or otherwise) in the international and/or domestic capital markets for an amount not exceeding Rs 14,000 crore, the company said in a notice to the Bombay Stock Exchange.
The committee will also seek approval for increasing borrowing limit from Rs 50,000 crore to Rs 70,000 crore or the aggregate of the paid up capital and free reserves of the company, whichever is higher.
It will also seek shareholders’ approval for creation of charges on its movable and immovable properties, in respect of borrowings, the BSE statement said.
Analysts said the company is planning to raise funds through privately placed debt securities for refinancing its existing debt.
Sanjay Jain, analyst at Motilal Oswal said, “The fund raising is likely for refinancing the company’s existing debt. Further, the company is looking at raising the limit of its standalone debt, as it has earmarked capital expenditure of around Rs 16,000-17,000 crore for its Kalinganagar plant.”
Financial Chronicle reported on Monday that Tata Steel’s debt was likely to peak this financial year, with the company earmarking capital expenditure of Rs 16,000-17,000 crore during 2014-15, mainly for its Kalinganagar plant in Odhisa.
Tata Steel’s consolidated cash and cash equivalents as on March 31, stood at Rs 11,373 crore; its net debt was Rs 67,326 crore.
On a consolidated basis, Tata Steel reported net profit of Rs 1,036 crore in January-March, against net loss of Rs 6,529 crore a year ago. Total income from operations rose 22.44 per cent from a year ago to Rs 42,428.05 crore in January-March. Tata Steel group is among the top-10 global steel firms with an annual crude steel capacity of over 29 mtpa. It is now the world’s second-most geographically diversified steel producer, with commercial presence in over 50 countries. Shares of Tata Steel closed at Rs 532.10 on Tuesday up 1.38 per cent from its previous close.