Tata Steel, India’s largest producer of the alloy, said it had sold its entire stake in Malaysia’s Southern Steel Berhad for $72 million (Rs 335 crore) as part of a reorganisation process. The company had held a 27.03 per cent in the Penang-based company through its unit NatSteel Holdings, Tata Steel said today in a statement to the Bombay Stock Exchange.
The announcement follows some changes on the Southern Steel’s board. T V Narendran, alternate director to Tata Steel Group Chief Financial Officer Koushik Chatterjee, stepped down from the board on May 24, according to the company’s website.
“The sale is part of Tata Steel’s strategy of restructuring its portfolio and reconsidering its position in geographies where it does not have a majority control,” the company said in the statement. “The company will continue to explore various opportunities to grow its South-East Asian business in the future,” it said.
The Tata Steel stock fell 0.41 per cent to Rs 509.2 by close of Friday’s trade on the BSE in Mumbai. The company had made the announcement after market hours. The benchmark Sensitive Index of the Bombay Stock Exchange rose 0.3 per cent to 17,955.82 by close of trade.
On Wednesday, Tata Steel had announced its plan to raise about Rs 1,600 crore through a preferential allotment of shares and warrants to promoter firm Tata Sons. The steel major’s balance sheet is quite leveraged and it may use the raised funds to address this. The company had net debt of $9.8 billion (Rs 45,668 crore) at the end of the financial year ended March 31 and its net debt-to-equity ratio was 1.77.
Tata Steel is also aggressively looking at backward integration of its European subsidiary Corus and it may invest the money to develop mines in Mozambique and Canada. The company also has a requirement of funds for the three-million-tonne expansion plan at its Jamshedpur plant and a new steel project in Kalinganagar, Orissa.
The Jamshedpur expansion needs Rs 14,000 crore, of which Rs 7,000 crore will be raised as debt and the rest as equity and internal accruals.