New Delhi: Tata Steel is believed to have begun talks to raise up to USD five billion (over Rs 25,000 crore) from a consortium of lenders to part-fund its domestic business expansion plans.

"Tata Steel needs a lot of money to fund its expansions. The negotiations for finalising the terms and conditions for raising funds up to USD five billion through debt are currently underway with a number of domestic lenders," an investment banker involved in the talks said.

Queries sent to Tata Steel in this regard remained unanswered.

Tata Steel has 6.8 million tonnes per annum (mtpa) steel-making capacity at the lone domestic facility at Jamshedpur. Overall, it has a total 27 mtpa capacity including operations in the UK and the Netherlands.

It is expanding capacity of its Jamshedpur plant by three mtpa through brown-field expansion. It is also putting up a six mtpa greenfield facility at Kalinganagar in Odisha in two equal phases with around Rs 34,500 crore investment.

The company has spent Rs 3,700 crore up to March, 2012 in the Odisha project, which was proposed to be funded through a 65:35 debt-equity ratio.

Tata Steel had earlier said that the first phase of the Odisha plant with three mtpa capacity would be implemented by 2014.

As on June, Tata Steel Group had a net debt of USD 9.711 billion. It had USD 3.504 total liquidity, including USD 1.481 billion in cash and cash equivalents and the rest was "undrawn lines".

In April this year, Tata Steel had issued non-convertible debentures worth Rs 1,500 crore on a private placement basis.


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