Tata Steel plans to focus on expansion plans in India this year and said demand environment is looking robust, which will help the steel maker pare down a key debt ratio.
CEO and managing director TV Narendran exclusively told Moneycontrol on May 30 that he expects debt levels to largely remain unchanged but hopes to bring down the net debt-to-EBITDA, a ratio that worsened in the March quarter.
"We expect the net-debt levels to be flat this year. We don't expect any significant reduction but maybe a small increase, in that Rs 77,000-80,000 crore range because we have money to be spent in the Kalinanagar project which is at its final stages," CEO TV Narendran said.
Tata Steel's net debt stood at Rs 77,550 crore as of March 31, largely unchanged from the previous quarter, while the net debt-to-EBITDA ratio worsening from 2.07 to 3.31. "We expect net debt-EBITDA to come down from the 3.3 levels to less than 2.5, maybe 2.3 or 2.4 by the end of this year. So we are focused on bringing the net debt to EBITDA levels to the target that we set ourselves," Narendran added.
EBITDA is short for earnings before interest, taxes, depreciation, and amortisation.
On May 29, the steel maker's board approved issuance of additional debt securities worth up to Rs 3,000 crore in one or more tranches, in the form of NCDs (Non-convertible debentures) on private placement basis.
Also read: Tata Steel Q4 results: A look at the key highlights
When asked about the utilization of the funds raised via NCDs, Narendran said, "This year, you will see a lot of actions for refinancing the debt so that we reduce our cost of capital. We would explore other instruments throughout the year."
The company's board has also approved a proposal to infuse funds up to $2.11 billion (Rs 17,407.50 crore) into a wholly-owned subsidiary T Steel Holdings (TSHP) Singapore, to repay debt and to support the restructuring costs at Tata Steel UK.
Further, a plan to convert debt instruments worth $565 million (approximately Rs 4,661.25 crore) into equity shares in TSHP during the fiscal year 2024-25 has also been approved by the board.
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