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Tata Steel plans $500 mn GDR issue in six months

Abhineet Kumar  |  Mumbai 

The company had raised the same amount eight months ago, which was used to expand its Jamshedpur unit

Tata Steel, the largest Indian producer, has once again planned to tap the (GDR) market for raising at least $500 million (Rs 2,300 crore). The money is to be raised within the next two quarters, to capitalise the balance sheet, say bankers familiar with the development.

The company had raised $500 million about eight months ago, which was used to expand its Jamshedpur unit. The company is taking it capacity there to 9.7 million tonnes per annum (mtpa) by December 2011, from the current 6.8 mtpa.

had gross debt of $12.9 billion (Rs 58,500 crore) in the quarter ended December 31. It accumulated most of this with the acquisition of Anglo-Dutch steel maker Corus, for $12.1 billion in 2007. This was the largest acquisition abroad made by any Indian company. It now plans to reduce the gross debt by $2 billion (Rs 9,000 crore) in multiple tranches over the next two years.

“The next round of fund raising is in discussion stage now,” said a banker familiar with the development. “The company wants to take a gradual approach for raising Rs 5,000 crore; almost half of it is going to take place in the next six months.”

Last year in August, the company took an enabling resolution to raise up to Rs 5,000 crore through equity issuances. However, it had not given any timeline or preferred mode for issuance.

GDR is going to be the preferred mode, as the company’s depository receipts are already listed on the London Stock Exchange.

“There is no specific plan of the company to raise capital at present that merits any disclosure,” said the company in an emailed response, when asked to comment.

Citigroup Global Markets, International, and UBS were the banks acting as joint lead managers and joint book runners for the issue in July,which saw the listing of the company’s GDRs on the LSE.

On a consolidated basis, the company reported net sales of Rs 74,532 crore for the nine months ending December 31, about 38 per cent lower than the number for the corresponding period of the previous year.

In the same period, it reported net loss of Rs 4,432 crore, down from the profit of Rs 9,426 crore in the corresponding period of the previous year. The profit suffered as the economic downturn affected that of Corus.

The stock of the company closed 1.2 per cent up, at Rs 643.5 a share, on the Bombay Stock Exchange on Friday.

First Published: Mon, March 29 2010. 00:42 IST