Tata Steel to raise $ 600 million for funding capital expenditure, refinancing debt

According to Tata Steel, Executive Director and CFO Koushik Chatterjee, the steel maker had set a target of reducing gross debt by USD 1 billion in FY20; As on March 31, 2019, the company had a net debt of Rs 1 trillion

By BusinessToday.In  
Friday, July 19, 2019

Tata Steel, India's largest private steel manufacturer, is planning to raise USD 600 million to finance its domestic operations and to refinance its loans, said Koushik Chatterjee, executive director and CFO, Tata Steel.

Speaking on the sidelines of 112th Annual General Meeting of Tata Steel, Chatterjee said the company would primarily use the fund to meet the capital expenditure of phase 2 expansion at its Kalinganagar plant located in Odisha's Jajpur district.

Tata Steel Kalinganagar (TSK) has recently been included in World Economic Forum's (WEF) Global Lighthouse Network, a community of manufacturers showing leadership in applying Fourth Industrial Revolution technologies to drive financial and operational impact. The company claims that it is the first and the only Indian manufacturing plant to be included in the WEF's Lighthouse Network.

Chatterjee said that the steel maker had set a target of reducing gross debt by USD 1 billion in FY20, after Tata Steel's merger of its European operations with Thyssenkrupp AG fell apart after failing to meet Europe's anti-trust requirements. Tata Steel Europe had debt of 2 billion euro as on March 31, 2019.

Tata Steel had signed definitive agreement with Thyssenkrupp AG on June 30, 2018, to combine their European steel businesses to create the continent's second-largest steelmaker after ArcelorMittal. However, the two companies abandoned plan to merge their steel businesses in Europe after it was blocked by the European Commission.

As on March 31, 2019, the company had a net debt of Rs 1 trillion. During the January-March quarter, Tata Steel's consolidated profit fell sharply by 84.37 per cent to Rs 2,295.25 crore as compared to Rs 14,688.02 crore during the corresponding quarter last year.

The steel giant's consolidated revenue grew 26 per cent y-o-y to Rs 42,424 crore in Q4 FY19, while adjusted BITDA (earnings before interest, tax, depreciation and amortization) increased 33 per cent to Rs 7,814 crore as compared to Rs 5,857 crores in Q4 FY18.

Speaking on the occasion, N Chandrasekharan, Chairman, Tata Steel, said the company aims to reduce debt and bring it to 2-2.5 times debt to EBITDA. "Our focus is on increasing capacity in India; we know the European assets haven't produced returns, but efforts are on," he said.

Edited by Chitranjan Kumar

Also Read: Reliance Industries Q1 results: Profit up 6.8% at Rs 10,104 crore, revenue jumps 22%

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