Tata Steel Seals $6.6 Billion Loan for New Plant

NEW DELHI--Tata Steel Ltd. (500470.BY) has arranged about 350 billion rupees ($6.6 billion) from a consortium of Indian banks to fund the construction of a factory in eastern India, a person familiar with the matter said Monday.

State Bank of India (500112.BY) and ICICI Bank Ltd. (532174.BY) are part of the consortium, said the person.

He didn't name the other lenders.

The fundraising indicates banks maybe willing to consider large infrastructure projects again for financing.

Funding for infrastructure projects in India has dropped sharply over the past year. Banks, which already have a large exposure to the sector, have become reluctant to fund companies such as power producers and steelmakers further because of worries over a slowing local economy.

As of June 30, Tata Steel, the eighth-largest steelmaker globally by capacity, had $9.3 billion in net debt. Most the debt had been taken six years ago when it acquired Anglo-Dutch steelmaker Corus, now named Tata Steel Europe.

While Tata Steel Europe's financial performance has been weak over the past few quarters due to the economic troubles in Europe, Tata Steel's Indian operations have been growing at a fast clip.

Tata Steel currently operates a plant in the eastern Indian town of Jamshedpur with a capacity of 10 million metric tons a year.

The company has arranged the funding for its second plant, which it is building in the town of Kalinganagar. It plans to produce 6.0 million tons of steel a year at the new factory.

Write to Prasenjit Bhattacharya at [e-mail]

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