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Tata Steel, one of the largest private steel companies in India, will pare debt by $1 billion (over ₹8,000 crore) during the current fiscal; while focussing on domestic capacity expansion, TV Narendran, CEO and Managing Director of the company, said. The company’s debt at the end of the June quarter was over ₹71,000 crore.
Overall, the working capital and cash flows on account of higher capex, have led to an increase in the net debt of about ₹3,600 crore on a quarter-on-quarter basis. However, finance costs remained stable sequentially.
Net debt to EBITDA was around 2.9, and Net debt to equity is 0.69. The group liquidity was about ₹30,500 crore, including ₹19,000 crore of cash and cash equivalent.
“We have always said that we will reduce debt by a billion dollars a year. And apart from last year (FY23), we have been doing it every year. As we grow the India business, the opportunity for that (debt reduction) increases because the cash flows from the India business has been strong. There will be some challenging years here and there. But, we are committed to bringing down the debt and keeping the net debt to EBITDA at below 2 (long term),” he told businessline.
During the post earnings conference call, the company’s top brass had pointed out that there are extraordinary costs that come in (such as the blast furnace relining in Europe) which have to be absorbed. However, deleveraging continues to get the same priority as capex.
In India, the company’s capex include expansion at Kalinganagar and setting up an electric arc furnace in Ludhiana.
Plans are afoot to bring down the net debt to EBITDA to 2.5 levels by the year-end.
Limited interest in acquisitions
According to Narendran, there is scope across “existing sites” of the company to double capacities and these are being looked into.
Limited interest in acquisitions is not because of the debt position.
“We said our existing sites allows us the opportunity to double capacities over the next few years. So do we need to look at acquisitions or would we try for greater efficiencies in existing sites by scaling up,” he said.
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