Tata Sons to up holding in Tata Steel to 33%

MUMBAI: Tata group bluechip, Tata Steel, which recorded its highest ever PAT at Rs 3,700-crore in FY 06, will be raising Rs 6,500 crore within the next few months to meet its expansion, possible acquisitions and greenfield financing requirements.

While Tata Sons will be injecting 10 per cent of this through a preferential issue at a SEBI-determined price in two tranches, Tata Steel plans to tap foreign markets for the remaining as the price it will be able to obtain "will be close to the market value," said Tata Steel's Chairman Ratan Tata at the 99th AGM of the company held here today.

In the first tranche, Tata Sons will be putting in Rs 1,300 crore and post the 10 per cent preferential issue, Tata Sons' holding in Tata Steel will increase to 33 per cent from the present level of 26 per cent. "We will raise the promoters holding in order to act as a deterrent to takeovers," Tata said.

The Tata group Chairman was at pains to point to shareholders that a rights issue would be considered at an appropriate time but right now, tapping the foreign markets was the best option for the company. "If we go in for a rights issue now, the existing shareholders will want a discount and that will not be in the best interests of the company," he observed.

Stating that his aim was to make Tata Steel a 30 million tpa company over the next ten years, Tata announced a capex of Rs 70,000-crore for the period. "This will be for expansions, acquisitions as well for financing greenfield projects. This will be raised through a combination of borrowings and internal accruals."