Shareholders clear Rs 50,000-crore borrowing limit for Tata Steel
According to Sonal Varma, India Economist at Nomura India, will cut key rates by 0.25 per cent (25 basis points) in April as inflation is likely to come down further.
Tata Steel said on Tuesday its shareholders have approved to enhance its borrowing limit by 25 per cent to Rs 50,000 crore to part-finance several ongoing expansion activities.
In a filing to the BSE, the company said the resolution, for which voting was conducted through postal ballot, was passed with requisite majority.
Before this, the company had the mandate to borrow up to Rs 40,000 crore. According to the filing, 90.41 per cent shareholders approved the proposal to increase the borrowing limit.
However, a chunk of institutional shareholders, who hold 9.50 per cent stake in the company, voted against the proposal.
According to the filing, institutional shareholders in total hold 23,36,78,884 shares or 42.81 per cent stake in the Tata group firm.
As on December 31, 2011, Tata Steel had a net debt of Rs 50,528 crore, which includes a part of the loan taken by the company to acquire UK-based steelmaker Corus in 2007.
"Taking into consideration the requirements to meet the cost of the company's greenfield projects in India, and investments in raw materials projects globally... It is expected that the limit of Rs 40,000 crore sanctioned by the shareholders will not be adequate," Tata Steel had said in its postal ballot notice to the shareholders.
Last year, the Tata group firm raised around Rs 4,977 crore through a follow-on-public offer and bond issue. The company is rolling out several expansion plans, including a new 6 million tonne steel plant at Kalinganagar in Odisha.
Besides, its Jamshedpur facility will also add 2.9 million tonne new capacity, that is slated for commissioning soon.
Post commissioning, its total production capacity will reach 10 million tonne per annum. For the current fiscal, the company has kept a capex of $2.5 billion (about Rs 12,500 crore), out of which $800 million (about Rs 4,000 crore) will be spent on the upcoming Kalinganagar plant.
The company will also spend $600 million on its European operations and around $400-500 million on its Jamshedpur plant.
In the October-December quarter, the company had posted a consolidated net loss of Rs 602.67 crore, its first quarterly loss in more than two years, largely due to Rs 741.70 crore writedown on inventories of raw materials and finished goods, especially in Tata Steel Europe.
Shares of the company closed 1.29 per cent higher at Rs 477.95 apiece on the BSE.