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Tata Steel raises borrowing limit to Rs 50,000 cr

Press Trust of India  |  Mumbai 

Tata Steel today said it has got shareholders' approval to increase its borrowing limit by 25% to Rs 50,000 crore to part-finance several ongoing expansion activities.

In a filing to the BSE, the company said the resolution, for which voting was conducted through postal ballot, was passed with requisite majority.

Before this, the company had the mandate to borrow up to Rs 40,000 crore.

According to the filing, 90.41% approved the proposal to increase the borrowing limit.

However, a chunk of institutional shareholders, who hold 9.50% stake in the company, voted against the proposal.

According to the filing, institutional in total hold 23,36,78,884 shares or 42.81% stake in the Tata group firm.

As on December 31, 2011, Tata Steel had a net debt of Rs 50,528 crore, which includes a part of the loan taken by the company to acquire UK-based steelmaker Corus in 2007.

"Taking into consideration the requirements to meet the cost of the company's greenfield projects in India, and investments in raw materials projects globally... It is expected that the limit of Rs 40,000 crore sanctioned by the will not be adequate," Tata Steel had said in its postal notice to the shareholders.

Last year, the Tata group firm had raised about Rs 4,977 crore through a follow on public offer and bond issue.

The company is rolling out several expansion plans, including a new 6 million tonne steel plant at Kalinganagar in Odisha.

Besides, its Jamshedpur facility will also be adding 2.9 million tonne new capacity, that is slated for commissioning soon. Post-commissioning, its total production capacity will become 10 million tonne per annum.

For the current fiscal, the company has kept a capex of $2.5 billion (about Rs 12,500 crore), out of which $800 million (about Rs 4,000 crore) will be spent on the upcoming Kalinganagar plant.

The company will also spend $600 million on its European operations and about $400-500 million on its

In the October-December quarter, the company had posted a consolidated net loss of Rs 602.67 crore, its first quarterly loss in more than two years, largely due to Rs 741.70 crore write down on inventories of raw materials and finished goods, especially in Tata Steel Europe.

Shares of the company were being traded at Rs 478.40 apiece on the BSE at 1405 hours, up 1.39% from the previous close.

First Published: Tue, April 03 2012. 15:55 IST