Tata Steel Board Approves Rs 2700 Cr NCD Fund Raise

Tata Steel, a titan of the Indian steel industry, has received the green light from its board to raise Rs 2,700 crore through the issuance of non-convertible debentures (NCD). This strategic move comes as the company seeks to solidify its financial footing.

Tailored NCD Structure

The NCD issued by Tata Steel will be designed to meet specific investment criteria. They will carry a fixed interest rate, offering predictable returns to investors. Additionally, these NCD will be unsecured, meaning they are not backed by any physical assets of the company. The total issue size will comprise 2,70,000 NCDs, each with a face value of Rs 1 lakh. These instruments will be redeemable and listed on the wholesale debt market (WDM) segment of the Bombay Stock Exchange (BSE), providing investors with an avenue for trading. The tentative allotment date for the NCDs is set for March 27, 2024, with a maturity date of March 26, 2027.

Frequent NCD Utilization

This latest NCD issuance marks the third such fundraising effort undertaken by Tata Steel in the past year and a half. In February 2023, the company successfully raised Rs 2,150 crore via NCD, and in September 2022, it secured Rs 2,000 crore through the same method. This repeated use of NCD suggests a potentially ongoing need for capital by Tata Steel.

Analyst Speculation on Fund Usage

Market analysts are scrutinizing the purpose behind Tata Steel’s frequent recourse to NCD issuances. Several possibilities are being considered. The funds raised could be used to repay existing debt, finance upcoming capital expenditures for plant modernization or expansion, or even fuel strategic acquisitions to bolster the company’s market position. Tata Steel’s future financial disclosures and actions will likely shed light on the specific allocation of these NCD-generated funds.

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