As of March 2019, at a consolidated level, the group had a debt pile of Rs 1,08,016 crore on its book, after having pared around Rs 17,864 crore during the course of FY19.
Following the failure of the merger deal with Thyssenkrupp, Tata Steel Group is focusing on turning around its struggling European operations with positive cash-flows, and also has decided to not increase the debt levels this fiscal year. Sitting on a debt pile of Rs 1.08 trillion–partly because of two major buyouts in the domestic last fiscal–the country’s largest alloy maker has decided not to leverage further this year.
As of March 2019, at a consolidated level, the group had a debt pile of Rs 1,08,016 crore on its book, after having pared around Rs 17,864 crore during the course of FY19. Addressing the 112th AGM, Tata Steel Group chairman N Chandrasekaran said the group is also focusing on generating enough cash-flows and bringing down debt levels.
“Last year we spoke a lot about the merger of our European subsidiaries in the Netherlands and Britain with Thyssenkrupp. Unfortunately the plan did not meet with the European Competition Commission. So, we have decided to work towards turning these operations around by ensuring positive cash-flows,” he said.
Our management teams, both at Tata Steel Europe and as well as at the corporate level at the group, are working together to drive this agenda,” he added. It can be noted that recently, the EU blocked the proposed 50:50 joint venture it had sewed up with the German conglomerate, saying the new entity will hurt competition. He further said to generate cash flows, the company will dispose of certain assets and at the same time bring down the number of subsidiaries through mergers.
At the same time, he said the company will continue with its existing plans of increasing the capacities without making significant capital expenditure now. “We are in the process of increasing the capacity of our Kalinganar plant to 8 mt by 2022, from 3 mt now. However, this is subjective to market conditions and the cash flow position,” Chandrasekaran said.
Speaking to reporters on the sidelines of the AGM, group executive director and chief financial officer Koushik Chatterjee said the company has completed the fund raising plan of USD 600 million. “We will not be increasing our borrowings beyond the current levels. The USD 600 million recently raised will be used to partly repay/prepay existing debt and also to fund the Kalinganagar expansion,” he said. On the European operations, group managing director TV Narendran said, “currently the focus will be on making European business cash-positive and will take a call on divesting it later. Currently we are focusing on turning around the operations cash positive.”
Earlier, Chandrasekaran told shareholders that FY19 was a strategically important year for the company as it acquired Bhushan Steel and Usha Martin for over 41,000 crore. He said the steel maker recorded highest volumes of nearly 27 million tonnes in FY19, boosted by these two deals.