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Tata Steel, the world's seventh largest producer in the sector, will save 40-45 basis points (bps) on interest after recently refinancing its $1.5-billion debt via a bond issue.
On the sidelines of its 107th annual general meeting held here, Koushik Chatterjee, group executive director (finance and corporate), said: "Including the $1.5-bn debt refinance, we will be refinancing a total debt of $5.5 bn this financial year. On the total sum refinanced this year, we will save about 20-25 bps."
The company plans to refinance a total of $7 bn debt over a period.
Continuing to remain concerned over the pace of demand growth for steel in Europe, it plans to launch 30 value-added products in the market this financial year, in addition to the same number last year.
"There is improvement in the European market on a year-on-year basis but the pace at which it is growing is still a bit of a worry," said Chatterjee.
Explaining the capital expenditure plan of Rs 12,000-14,000 crore this year, Chatterjee said most of this amount would come through internal accrual and the rest via project finance, already tied up.
"We plan to have about 3,000 employees at the Kalinganagar (Odisha's Jajpur district) plant once it is operational by the end of FY15," he said.
Though several shareholders suggested a bonus shares issue, Chairman Cyrus Mistry turned it down, saying the capital expenditure was high.
On stake sale in Dhamra port (Odisha), the company clarified that though it had exited the asset, it continued to have long-term cargo contracts and so this would not affect it when importing raw material.
Chatterjee said the spread between raw material and steel prices had been going down significantly and yet the company had been able to perform in recent quarters.
The consolidated net profit was Rs 337 crore in the June quarter, down 70 per cent from same period last year. This was due to a one-time exceptional loss due to a writedown taken on its Benga coal mine in Mozambique.
"We had not bought the mine at a high price but since it was sold by Rio Tinto, it triggered a writedown, which is seen in the W1 performance," explained Mistry, when shareholders asked why the company did not take the writedown when it bought stake in the mine.
