Tata Steel prioritises over $2 bn gross debt reduction in FY22

The estimated average expenditure of Tata Steel in India, over the next five years is around Rs 10,000-12,000 crore per annum, and that leaves out potential acquisitions. Tata Steel is poised for the upcoming growth stage even as it proceeds to stay the course on deleveraging. The firm is likely to decrease gross debt by over $2 billion in FY22. Koushik Chatterjee, Executive Director and Chief Financial Officer, Tata Steel, told the media that to position the next stage of the growth, the company would continue to deleverage and make its balance sheet even more effective. The presentation of the investors informed that amongst the FY22 deleveraging priorities, over $2 billion gross debt reduction and prioritising offshore debt pre-payments. He said the firm had made material repayments in the Singapore and European balance sheets even in the June quarter. Chatterjee further added that in FY21, Tata Steel decreased net debt by $4 billion. In the next 2-3 years, the priority would be nearly $1 billion of repayment every year before the allocation surpluses towards growth. If there are acquisition possibilities, they will revisit the level. He also pointed out that despite the Bhushan Steel and Usha Martin acquisitions of over Rs 40,000 crore in the interim period, the company's net debt has been restored to FY18 level of Rs 75,000 crore. The firm was able to record gross debt/EBITDA of 2.9x and net debt/EBITDA around 2.5x. However, it has established an aim of net debt/EBITDA at 2x. Image Source Also read: Crude steel output of Tata Steel surges over 43%, sales by 35%