Tata Steel seeks long-term funds from IFC

Tata Steel has approached International Finance Corporation (IFC) for funding a major portion of its expansion plan through a long-term dollar loan.

In its papers submitted to IFC the company has said that Tata Steel's strategy is to drive growth and globalisation by maximising the potential of its existing operations; and enhancing value creation by making semi-finished products (slabs/billets) - primarily in India, where raw materials are available and factors of production are competitive - and then finishing them at locations, including outside India, where customers and markets currently exist or will grow in future.

In order to achieve its strategy, Tisco proposes to implement a major investment program and has approached IFC for providing funding in the form of long term dollar loans.

The proposed program involves a capacity expansion at existing operations in Jamshedpur by replacing older production units, and the acquisition of NatSteel - a Singapore headquartered steel company with operations in Singapore, China, Vietnam, Thailand, Malaysia, Philippines and Australia.

The company has approached Tata Steel for funding a major portion of its expansion plans lined up for the next few years. It also aims to grow into a 10 million tonne company by end of the decade mostly through acquisitions.

Tata Steel board recently approved a proposal to raise long-term resources to the tune of Rs 5,000 crore for funding the company's growth projects.

An extraordinary general meeting (EGM) for shareholders' approval was scheduled for March 24. The expansion programmes announced by the company so far comprise the one million tonne expansion in Jamshedpur for an investment of Rs 1,995 crore.

Further addition of 2.4 million tonne capacity at Jamshedpur for Rs 7,800 crore, acquisition of the steel business of NatSteel at Rs 1,313 crore and a six million tonne greenfield plant in Orissa at a cost of Rs 15,400 crore.

The company has also entered into an agreement with the West Bengal Industrial Development Corporation (WBIDC) for setting up a coke plant in Haldia. The six of the project is estimated to be in the region of Rs 700 crore.

Tata Steel was also looking at the possibility of acquiring mining lease in Australia. This would allow the company to import coking coal at reasonable cost into the country against a scenario where international prices of coke were sky rocketing.

Meanwhile, Tisco touched Rs 360 at BSE while it closed at Rs 358 at NSE today.