Tata Steel is tightening iron grip in the east

Six months ago, Tata Steelshocked everyone with an aggressive play for Bhushan Steel. A second smaller acquisition followed. the Tata finance team is busy negotiating with banks to raise $700 million of external commercial borrowings (ECB). This will refinance short-term loans raised to pay off Bhushan’s lenders as part of the Tata ‘fit for future’ programme that aims to bring down $1 billion of leverage in the next 12 months. It has already prepaid Rs 2,000 crore of the Rs 35,200-crore acquisition bill within six months of the takeover – its largest in India in its 111-year history. Tata Steel has executed $60 billion in gross capital raising in 10 years and braved unprecedented upheavals. It went from net debt free in 2005-06 to a jaw-dropping $13-billion leveraged buyout. Then came Corus that haemorrhaged £1 million a day in 2015-16. It ended the year as a £300-million loss and an unsustainable debt-Ebitda ratio of 8x. For the Tatas, this financial management may thus seem inconsequential at first glance, but for outsiders, it certainly shows reinvigorating intent and conviction.