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Tata Steel gains after refinancing debt in Europe

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Shares of steel major were up 0.64% at Rs 489.65 after the company announced successful refinancing of 1.75 billion euros of European debt.

Tata Steel announced that Tata Steel Netherlands Holdings B.V. ("TSNHBV"), a 100% subsidiary of Tata Steel, has executed agreements for the refinancing of its bank debt.

TSNBHV has raised term loan facilities of 1.75 billion euros from 19 banks. This represents a reduction of 500 million euros versus the external debt outstanding in Tata Steel Europe as of March 2019, enabling the standalone European business to have a more robust balance sheet while it is also putting in significant efforts at restructuring and improving its operating performance. These facilities have also been contracted at favorable terms and more efficient pricing, besides extending the maturity profile relative to the existing ones, the company said.

Koushik Chatterjee, executive director & chief financial officer, Tata Steel said: The new financing has more flexible terms and better pricing that will provide greater financial headroom to the business in the coming years. The Company was able to complete this financing despite all the volatility in the financial markets, demonstrating the strong confidence enjoyed by Tata Steel in the financial community.

Tata Steel India's production volume rose 1.83% to 4.46 million tons in Q3 December 2019 as against 4.38 million in Q3 December 2018. Production in Europe surged 6.84% to 2.5 million tons in same period.

Tata Steel India's sales jumped 24.42% to 4.84 million tonne in Q3 December 2019. Sales in Europe declined 1.7% to 2.31 million tons on the back of overall slowdown and seasonal weakness.

During Q3 December 2019, weakness in GDP growth and industrial output continued across major economies affecting steel demand. However, Chinese steel demand was buoyant as despite higher steel production, exports stabilized at around five million tonne a month.

Sharing its outlook, Tata Steel said: "Positive developments on the US-China trade talks along with a step-up in China's policy easing is expected to provide support to global steel demand and steel prices. However escalating geo political tension pose a risk."

In Europe, the overall slowdown coupled with seasonal weakness kept steel spreads under pressure as declining steel prices offset the benefit of softness in raw material prices, the company added.

Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonnes per annum (MnTPA). It is one of the world's most geographically-diversified steel producers, with operations and commercial presence across the world.

On consolidated basis, the steel major reported a 6% rise in net profit to Rs 3,302.31 crore on the back of one time deferred tax gain of Rs 4365.33 crore in Q2 September 2019. Net sales fell 15.77% to Rs 33,953.75 crore during the period under review.

Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonnes per annum.

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, January 13 2020. 12:00 IST