Board of Tata Steel Approves Fundraising Via NCDs Worth Rs. 3000 Crore

Tata Steel, one of India’s leading steel producers, has announced a financial move to strengthen its resources. The company’s board has approved a plan to raise Rs. 3000 crore through the issuance of Non-Convertible Debentures (NCDs) which aims to work on the company’s financial stability and support its expansion plans.

Fundraising Strategy

The decision to raise funds via NCDs was officially sanctioned recently. NCDs are a popular debt instrument that offers a fixed return to investors and are not convertible into equity shares of the issuing company. By choosing this route, Tata Steel aims to attract long-term investors looking for stable returns, thus ensuring a steady influx of capital.

Utilization of Funds

The primary objective behind this fundraising is to manage the company’s debt and finance its general corporate expenses. Additionally, to support projects and capital expenditure plans and improve liquidity. According to the company’s statements, the proceeds will be used for refinancing existing loans, meeting working capital requirements, and supporting ongoing and new projects.

Financial Performance 

This announcement comes with Tata Steel’s Q4FY24 results, which reported a notable 65% decline in net profit, amounting to Rs.555 crore. The decline has been attributed to operational challenges and market conditions affecting the steel industry globally. The company’s consolidated revenue from operations stood at Rs.62,961 crore, reflecting a decline. 

Market Response & Outlook

According to the reports, the analysts took Tata Steel’s decision to issue NCDs positively, considering it a prudent measure to strengthen the company’s foundation amid fluctuating market conditions globally. The infusion of Rs.3000 crore is expected to provide the necessary liquidity to navigate short-term challenges while positioning the company for long-term growth. The company’s focus on reducing debt and investing in high-return projects is further anticipated to boost its market competitiveness.

Conclusion

Tata Steel’s board approval for raising Rs. 3000 crore through NCDs marks an important step in reinforcing the company’s financial health. This fundraising will not only aid in managing debt and funding new projects but also signal to investors the company’s proactive approach in sustaining growth and stability in a competitive market. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.