Tata Steel To Raise ₹2,700 Crore Via Private Placement of NCDs

Tata Steel, a leading Indian steel producer, recently announced a significant move to raise funds. On March 19, 2024, the company’s board approved the issuance of non-convertible debentures (NCDs) worth ₹2,700 crore, indicating a strategic step to strengthen its financial position. The company will issue 2,70,000 NCDs of face value ₹1,00,000 each.

Debentures: A Tool for Growth

This debenture issue allows Tata Steel to raise capital without diluting its existing equity. NCDs are essentially debt instruments that function like loans, with investors receiving interest payments at predetermined intervals and the principal amount upon maturity.

Details of the Debenture Issue

The key aspects of the debenture issue are as follows:

• Issue Size: ₹2,700 crore
• Instrument: Non-convertible debentures (NCDs)
• Allotment Date: March 27, 2024
• Maturity Date: March 26, 2027
• Placement: Private placement basis

Impact on Tata Steel

The successful issuance of these debentures can have a positive impact on Tata Steel’s financial health:

• Improved Liquidity: The additional funds will enhance Tata Steel’s cash flow and financial flexibility.
• Strategic Investments: The capital can be directed towards strategic investments that support long-term growth objectives.

Market Reaction

On March 20, 2023, the markets provided negative reactions, and the share price of Tata Steel Ltd opened at ₹149.70 and touched the day low of ₹143.85.

Conclusion

Tata Steel’s decision to raise ₹2,700 crore through debentures highlights a proactive approach to financial management. The additional capital can provide the company with the resources needed to navigate current market challenges and pursue future growth opportunities. The success of this debenture issue will likely be judged on its impact on Tata Steel’s financial stability, strategic investments, and overall business performance in the coming quarters.

About Tata Steel Ltd

Incorporated in 1907, Tata Steel Ltd is the first integrated private steel company. It has a rich presence across the entire value chain of steel manufacturing, from mining and processing iron ore and coal to producing and distributing finished products. By 2025, the company has a target to increase domestic steelmaking capacity to 30 MnTPA.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.