Tata Steel has unveiled a comprehensive $2.1 billion (Rs 17,408 crore) investment plan aimed at repaying the debt of its offshore entities and restructuring its loss-making UK business. This strategic move includes a significant capital infusion into its Singapore arm, T Steel Holdings, and a conversion of debt instruments into equity shares.
The Indian steel giant announced the conversion of $565 million (Rs 4,661 crore) worth of debt instruments held by its Singapore subsidiary into equity shares. Both the capital infusion and the debt-to-equity conversion are set to be completed within this fiscal year. T Steel Holdings, which oversees Tata Steel’s international steel assets, including the UK plant, reported a loss of Rs 4,367 crore in FY23.
Additionally, Tata Steel plans to raise Rs 3,000 crore through non-convertible debentures (NCDs), a familiar fundraising method for the company. This financial strategy is part of a broader initiative to stabilize and grow its international operations.
A major component of Tata Steel’s investment includes a £1.25 billion ($1.6 billion) project to construct a new electric arc furnace (EAF) at its Port Talbot plant in the UK. This project will involve shutting down two existing blast furnaces by September, a move that will unfortunately lead to the loss of 2,800 jobs.
“We will proceed with the proposal to shut down heavy end assets this year and set up the EAF by 2027,” the company stated. “This is a difficult period of change for our people. With respect to the EAF, we will place equipment orders by September 2024 and have signed an agreement with the UK National Grid to secure a high-voltage connection, which will be available on schedule.”
Tata Steel emphasized its commitment to supporting affected employees in the UK, noting that it has offered the best-ever package of support in discussions with unions. The company has also finalized terms for a proposed grant package with the UK government to support the £1.25 billion investment.
The strategic investments and restructuring efforts underscore Tata Steel’s commitment to maintaining its competitive edge and ensuring sustainable growth in the global market. By addressing both financial stability and operational efficiency, Tata Steel aims to navigate the challenging economic landscape and emerge stronger in the steel industry.