Serial No: [●] Addressed to: [●] Date: March 9, 2020
Private & Confidential – For Private Circulation Only (This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus). This Disclosure Document has been prepared in conformity with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended from time to time
Tata Steel Limited (A Public Limited Company incorporated under the Indian Companies Act, 1882) Registered and Corporate Office: Bombay House, 24 Homi Mody Street, Fort, Mumbai – 400 001 Tel: +91 22 6665 8282, Fax: +91 22 6665 7724 e-mail: [email protected] CIN: L27100MH1907PLC000260 Website: www.tatasteel.com
Disclosure Document for issue by way of private placement by Tata Steel Limited (“TSL” or the “Company” or “Tata Steel” or the “Issuer”) of up to 6,700 Unsecured, Redeemable, Rated, Listed, Non-Convertible Debentures (“Debentures”) of the face value of Rs. 10,00,000 each, for cash aggregating to Rs. 670 crores (the “Issue”). BACKGROUND This disclosure document is related to the Debentures to be issued by the Issuer on a private placement basis and contains relevant information and disclosures required for the purpose of issuing the Debentures (“Information Memorandum” or the “Disclosure Document”). The issue of Debentures described under this Information Memorandum has been authorised by a resolution passed by the Board of Directors of the Issuer on August 13, 2018 and by the Committee of Directors on March 09,2020. GENERAL RISKS Investment in debt and debt related securities involves a degree of risk and investors should not invest any funds, unless they can afford to take the risks attached to such investments. For taking an investment decision, investors must rely on their own examination of the Company and the Issue, including the risks involved. The Debentures have not been recommended or approved by Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this document. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that all information with regard to the Issuer and the Issue in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. DEBENTURE HOLDERS The Debentures mentioned herein are not offered for sale or subscription to the public, but are being privately placed with a limited number of eligible investors. This Information Memorandum should not be treated as an offer for sale or solicitation of an offer to buy the Debentures as prescribed herein by any person, who is not a company incorporated in accordance with the provisions of the Companies Act, 1956 or Companies Act, 2013,as applicable,or a bank or financial institution under banks and such financial institutions and insurance companies and such other entities/persons as are set out in Rule 2 of the Companies (Acceptance of Deposit) Rules, 2014, as amended. This Information Memorandum does not constitute an offer for sale or a solicitation of an offer to buy the Debentures as described herein from any person other than the person whose name appears on the cover page of this Information Memorandum. No person other than such person, receiving a serially numbered copy of this document may treat the same as constituting an offer to sell or a solicitation of an offer to buy the Debentures.
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The distribution of this Information Memorandum and offer and sale of Debentures in certain jurisdictions may be restricted by law. It does not constitute an offer for sale or solicitation of an offer to buy in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such state or jurisdiction.
Persons into whose possession this Information Memorandum comes are required to inform themselves as to (a) the legal requirements for the purchase, holding or disposal of the Debentures, (b) any legal restrictions which may affect them and (c) the income and other tax consequences which may apply relevant to the purchase, holding or disposal of the Debentures. CREDIT RATING India Ratings and Research Private Limited (India Ratings) has assigned ‘Ind Ra AA Stable’ and Credit Analysis & Research Limited (CARE Ratings) has assigned ‘CARE AA; Stable’ (pronounced as Double A; Outlook: Stable) for the issue of Debentures. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
The rating is not a recommendation to buy, sell or hold Debentures and investors should take their own decision. The rating may be subject to suspension, revision or withdrawal at any time by the assigning Credit Rating Agency. Each Credit Rating Agency has a right to revise, suspend or withdraw the rating at any time on the basis of factors such as new information or unavailability of information or other circumstances which such Credit Rating Agency believes may have an impact on its rating. LISTING The Debentures are proposed to be listed on the wholesale debt market segment of BSE Limited (“BSE” or the “Stock Exchange”). BSE has given its ‘in-principle’ approval to list the Debentures by letter no. [●] dated March 9, 2020 which is annexed to this Information Memorandum as Annexure 5. The Issue would be under the electronic book mechanism for issuance of debt securities on private placement basis as per the Securities and Exchange Board of India (“SEBI”) circular no. SEBI/HO/DDHS/CIR/P/2018/05 dated January 5, 2018 any amendments thereto (“SEBI EBP Circular”) read with the “Updated Operational Guidelines for issuance of Securities on Private Placement basis through an (“Electronic Book Mechanism”) issued by BSE vide their Notice no. 20180928-24 dated September 28, 2019 and any amendments thereto (“BSE EBP Guidelines”), together with the SEBI EBP Circular referred to as the “Operational Guidelines”). The Company intends to use the BSE Bond – EBP platform (as defined in the section titled “Definitions”) for the Issue. ISSUE PROGRAMME Issue Opening Date March 12, 2020 Issue Closing Date March 12, 2020 Deemed Date of Allotment March 13, 2020 The Issuer reserves the right to change the Issue time table including the Date of Allotment / Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice. The Issue will be open for bidding on the Issue Opening Date.
The Issue shall be subject to the terms and conditions of this Disclosure Document filed with the Stock Exchange and other documents in relation to the Issue. DEBENTURE TRUSTEE REGISTRAR TO THE ISSUE IDBI Trusteeship Services Limited TSR Darashaw Limited Asian Building, Ground Floor, 6-10, Haji Moosa Patrawala Industrial Estate 17, R. Kamani Marg, Ballard Estate, 20, Dr. E. Moses Road, Mahalaxmi Mumbai – 400 001, India Mumbai 400 011, India Tel No.: +91 22 4080 7000 Tel No.: +91 22 6656 8484 Fax No.: + 91 22 6631 1776 Fax No.: + 91 22 66568494 Email: [email protected] Email: [email protected] Contact Person: Mr. Subrat Udgata Contact Person: Ms. Vidya Brahme, Chief Manager
The Issuer reserves the right to change the issue programme including the Deemed Date of Allotment at its sole discretion, without giving any reasons or prior notice. The Issue will be open for bidding on the Issue Opening Date.
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TABLE OF CONTENTS
DISCLAIMER ...... 4 DEFINITIONS / ABBREVIATIONS ...... 8 RISK FACTORS ...... 10 REGULATORY DISCLOSURES ...... 38 APPLICATION PROCESS ...... 98 ISSUE DETAILS ...... 101 ANNEXURE – 1 - CONSENT FROM IDBI TRUSTEESHIP SERVICES LIMITED...... 104 ANNEXURE – 2A - RATING ISSUED BY INDIA RATINGS AND RESEARCH PRIVATE LIMITED (INDIA RATINGS) ...... 105 ANNEXURE – 2B - RATING ISSUED BY CREDIT ANALYSIS & RESEARCH LIMITED (CARE RATINGS) ...... 107 ANNEXURE – 3 - APPLICATION FORM ...... 110 ANNEXURE – 4 - ILLUSTRATIVE CASH FLOWS ...... 113 ANNEXURE – 5 - IN-PRINCIPLE LISTING APPROVAL ...... 114
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DISCLAIMER
This Disclosure Document is neither a prospectus nor a statement in lieu of a prospectus under the Companies Act, 2013. The Issue of Debentures to be listed on the Stock Exchange is being made strictly on a private placement basis in accordance with applicable law. This Disclosure Document is not intended to be circulated to more than forty nine persons. Multiple copies hereof given to the same entity shall be deemed to be given to the same person and shall be treated as such. It does not constitute and shall not be deemed to constitute an offer or an invitation to subscribe to the Debentures to the public in general. This Disclosure Document should not be construed as a prospectus or a statement in lieu of a prospectus under the Companies Act, 2013 or any other prevailing rules or regulations.
This Disclosure Document has been prepared in conformity with the SEBI (Issue and Listing of Debt Securities) Regulations, 2008, as amended. Therefore, as per the applicable provisions, copy of this Disclosure Document has not been filed or submitted to SEBI for its review and/or approval. Further, since the Issue is being made on a private placement basis, the provisions of Section 26 of the Companies Act, 2013 shall not be applicable and accordingly, a copy of this Disclosure Document has not been filed with the Registrar of Companies or the SEBI.
This Disclosure Document has been prepared to provide general information about the Issuer and the Debentures to potential investors to whom it is addressed and who are willing and eligible to subscribe to the Issue. This Disclosure Document does not purport to contain all the information that any potential investor may require. Neither this Disclosure Document nor any other information supplied in connection with the Issue is intended to provide the basis of any credit or other evaluation and any recipient of this Disclosure Document should not consider such receipt a recommendation to subscribe to the Issue or purchase any Debentures. Each investor contemplating subscribing to the Issue or purchasing any Debentures should make its own independent investigation of the financial condition and affairs of the Issuer, and its own appraisal of the creditworthiness of the Issuer. Potential investors should consult their own financial, legal, tax and other professional advisors as to the risks and investment considerations arising from an investment in the Debentures and should possess the appropriate resources to analyze such investment and the suitability of such investment to such investor's particular circumstances.
Potential investors to Debentures must make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt and are able to bear the economic and/or commercial risk of investing in Debentures. Potential investors should conduct their own investigation, due diligence and analysis before applying for the Debentures. Noting in this Disclosure Document should be construed as advice or recommendation by the Issuer to subscribers to the Debentures. Potential investors should also consult their own advisors on the implications of application, allotment, sale, holding, ownership and redemption of these Debentures and matters incidental thereto.
The Issuer confirms that, as of the date hereof, this Disclosure Document (including the documents incorporated by reference herein, if any) contains all information that is material in the context of the Issue of the Debentures, is accurate in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements herein not misleading, in the light of the circumstances under which they are made. No person has been authorised to give any information or to make any representation not contained or incorporated by reference in this Disclosure Document or in any material made available by the Issuer to any potential investor pursuant hereto and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer.
The Issuer reserves the right to withdraw the private placement of the Debentures Issue prior to the issue closing date in the event of any unforeseen development adversely affecting the economic and regulatory environment or any other force majeure condition including any changes in applicable laws.
This Disclosure Document and the contents hereof are restricted only for the intended recipient(s) who have been addressed directly and specifically through a communication by the Issuer and only such recipients are eligible to apply for the Debentures. All investors are required to comply with the relevant regulations/guidelines applicable to them (including the BSE BOND - EBP operational guidelines issued by the BSE) for investing in this Issue. The contents of this Disclosure Document are intended to be used only by those investors to whom it is distributed. It is not intended for distribution to any other person and should not be reproduced by the recipient. The potential investors shall be required to independently procure all the licenses and approvals, if applicable, prior to subscribing to the Debentures and the Issuer 4 shall not be responsible for the same.
No invitation is being made to any persons other than those to whom Application Forms along with this Disclosure Document being issued have been sent by or on behalf of the Issuer. Any application by a person to whom the Disclosure Document has not been sent by or on behalf of the Issuer shall be rejected without assigning any reason.
The person who is in receipt of this Disclosure Document shall maintain utmost confidentiality regarding the contents of this Disclosure Document and shall not reproduce or distribute in whole or part or make any announcement in public or to a third party regarding the contents without the consent of the Issuer.
This Information Memorandum/ Private Placement Offer Letter does not constitute, nor may it be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
Each person receiving this Disclosure Document acknowledges that:
Such person has been afforded an opportunity to request and to review and has received all additional information considered by it to be necessary to verify the accuracy of or to supplement the information herein; and such person has not relied on any intermediary that may be associated with issuance of Debentures in connection with its investigation of the accuracy of such information or its investment decision.
The Issuer does not undertake to update the Disclosure Document to reflect subsequent events after the date of the Disclosure Document and thus it should not be relied upon with respect to such subsequent events without first confirming its accuracy with the Issuer.
Neither the delivery of this Disclosure Document nor any issue of Debentures made hereunder shall, under any circumstances, constitute a representation or create any implication that there has been no change in the affairs of the Issuer since the date hereof.
This Disclosure Document does not constitute, nor may it be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer or solicitation. No action is being taken to permit an offering of the Debentures or the distribution of this Disclosure Document in any jurisdiction where such action is required. The distribution of this Disclosure Document and the offering of the Debentures may be restricted by law in certain jurisdictions. Persons into whose possession this Disclosure Document comes are required to inform themselves about and to observe any such restrictions. The Disclosure Document is made available to investors in the Issue on the strict understanding that the contents hereof are strictly confidential and the details provided herein are strictly for the sole purpose of information to the potential investors.
CAUTIONARY NOTE
Each invited potential Investor acknowledges and agrees that each of them, (i) are knowledgeable and experienced in financial and business matters, have expertise in assessing credit, market and all other relevant risk and are capable of evaluating, and have evaluated, independently the merits, risks and suitability of subscribing to or purchasing the Debentures; (ii) understand that the Issuer has not provided, and will not provide, any material or other information regarding the Debentures, except as required under applicable laws, (iii) have not requested the Issuer to provide it with any such material or other information, (iv) have not relied on any investigation that any person acting on their behalf may have conducted with respect to the Debentures, (v) have made their own investment decision regarding the Debentures based on their own knowledge (and information they have or which is publicly available) with respect to the Debentures or the Issuer (vi) have had access to such information as deemed necessary or appropriate in connection with purchase of the Debentures, (vii) are not relying upon, and have not relied upon, any statement, representation or warranty made by any person, including, without limitation, the Issuer, and (viii) understand that, by purchase or holding of the Debentures, they are assuming and are capable of bearing the risk of loss that may occur with respect to the Debentures, including the possibility that they may lose all or a substantial portion of their investment in the Debentures.
It is the responsibility of each potential Investor to also ensure that they will sell these Debentures in strict accordance with this Disclosure Document, the Transaction Documents and all other applicable laws, so that the sale does not 5 constitute an offer to the public, within the meaning of the Companies Act, 1956 and/or the Companies Act, 2013. The potential investors shall at all times be responsible for ensuring that it shall not do any act deed or thing which would result this Disclosure Document being released to any third party (where such party is not an intended recipients from the Issuer) and in turn constitutes an offer to the public howsoever.
The distribution of this Information Memorandum or the Application Forms and the offer, sale, pledge or disposal of the Debentures may be restricted by law in certain jurisdictions. The sale or transfer of these Debentures outside India may require regulatory approvals in India, including without limitation, the approval of SEBI or RBI.
DISCLAIMER OF THE STOCK EXCHANGE
As required, a copy of this Disclosure Document has been submitted to the Stock Exchange in terms of the applicable SEBI regulations.
It is to be distinctly understood that such submission of the Disclosure Document with Stock Exchange or hosting the same on its website should not in any way be deemed or construed that the document has been cleared or approved by the Stock Exchange; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Disclosure Document; nor does it warrant that this Issuer’s Debentures will be listed or continue to be listed on the Stock Exchange; nor does it take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Company. Every person who desires to apply for or otherwise acquire any Debentures of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.
DISCLAIMER OF THE SEBI
As per the provisions of the applicable SEBI regulations, a copy of this Information Memorandum is not required to be filed with or submitted to SEBI for its observations or approval. Accordingly, it is to be distinctly understood that this Information Memorandum should not in any way be deemed or construed to have been approved or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any proposal for which the Debentures issued thereof is proposed to be made or for the correctness of the statements made or opinions expressed in this Information Memorandum.
DISCLAIMER OF THE TRUSTEE
The Issuer confirms that all necessary disclosures have been made in the Information Memorandum including but not limited to statutory and other regulatory disclosures. Investors should carefully read and note the contents of the Information Memorandum. Each prospective investor should make its own independent assessment of the merit of the investment in the Debentures and the Issuer. Prospective investors should consult their own financial, legal, tax and other professional advisors as to the risks and investment considerations arising from an investment in the Debentures and should possess the appropriate resources to analyze such investment and suitability of prospective investors are required to make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in such instruments. The Trustees, ipso facto, do not have the obligations of a borrower or a principal debtor or a guarantor as to the monies paid/invested by investors for the Debentures.
DISCLAIMER IN RESPECT OF JURISDICTION
This issue is made in India to investors as specified under the clause titled ‘Eligible Investors’ of this Information Memorandum, who shall be specifically approached by the Issuer. This Information Memorandum does not constitute an offer to sell or an invitation to subscribe to Debentures offered hereby to any person to whom it is not specifically addressed. Any disputes arising out of this Issue will be subject to the exclusive jurisdiction of the courts and tribunals at Kolkata. This Information Memorandum does not constitute an offer to sell or an invitation to subscribe to the Debentures herein, in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction.
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DISCLAIMER IN RESPECT OF CREDIT RATING AGENCY
Ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. The Credit Rating Agencies have based its ratings on information obtained from sources believed by it to be accurate and reliable. The Credit Rating Agencies do not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by Credit Rating Agencies have paid a credit rating fee, based on the amount and type of bank facilities/instruments.
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DEFINITIONS / ABBREVIATIONS
Unless the context otherwise indicates or requires, the following terms shall have the meanings given below in this Disclosure Document.
Definitions:
The Company / Issuer / Tata Tata Steel Limited Steel / TSL: Application Form The form which shall be circulated to the prospective investors along with the Disclosure Document for the purpose of applying for the Debentures Allot / Allotment / Allotted Unless the context otherwise requires or implies, the allotment of the Debentures pursuant to this Issue Board/ Board Of Directors/ Board of Directors of Tata Steel Limited Director(s) BSE BOND – EBP Platform Electronic book provider platform of BSE for issuance of debt securities on private placement basis Business Days A day which is not a Saturday, Sunday or a public holiday and on which clearing of cheque and RTGS facilities are available in Mumbai and Kolkata Companies Act The Companies Act, 2013, as amended Credit Rating Agency(ies) India Ratings and Research Private Limited (India Ratings) or Credit Analysis & Research Limited (Care Ratings) or any other credit rating agency appointed from time to time Crore 1 Crore = 10 million Date of Allotment The date on which Allotment for the Issue is made Debenture(s)/ NCDS Unsecured, redeemable, rated, listed, non-convertible debentures of the Company of the face value of Rs. 10,00,000 each aggregating up to Rs. 670 crores Debenture Holder(s) Person(s) holding debentures(s) and whose name is recorded as beneficial owner with the depository (if the debentures are in dematerialized form) as defined under Section 2 of the Depositories Act, 2018 Debenture Trustee IDBI Trusteeship Services Limited as trustee for the benefit of the debenture holders Debenture Trust Deed The deed to be entered into by the debenture trustee and the company specifying the powers, authorities and obligations of the company and the debenture trustee in respect of the debentures Depository(ies) A depository registered with sebi under the SEBI (Depositories And Participants) Regulations, 1996 as amended from time to time Depository Participant / DP A depository participant as defined under Depositories Act, 2018 Disclosure Document/ This Disclosure Document dated March 9, 2020 pursuant to which the Debentures Information Memorandum are being offered in this Issue Financial Year / FY Financial year of the company i.e. a period commencing from 1st April and ending on 31st March of the next calendar year Group The Company along with its subsidiaries, associates and joint ventures Indian Competition Act The Competition Act, 2002, as amended Investor Such eligible person who subscribe to this Issue and any eligible person which subsequently purchase the Debentures 8
Issue / Private Placement Private placement by Tata Steel Limited of [●]% coupon, 6,700 unsecured, redeemable, rated, listed, non-convertible debentures of the face value of Rs. 10,00,000 each, with marketable lot of one, for cash aggregating to Rs. 670 crores Issue Closing Date March 12, 2020 Issue Opening Date March 12. 2020 Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 NRI A person resident outside India, who is a citizen of India or a person of Indian origin and shall have the same meaning as ascribed to such term in the Foreign Exchange Management Act, 1999 and the rules and regulations framed thereunder Offer Documents Shall mean this Information Memorandum/Disclosure Documents and the Private Placement Offer Cum Application Letter Registrar Registrar and Transfer Agent to the Issue, in this case being TSR Darashaw Consultants Private Limited, formerly TSR Darashaw Limited. Stock Exchange / Designated BSE Limited Stock Exchange Trusteeship Agreement The agreement entered into by the debenture trustee and the Company dated March 9, 2020 appointing the debenture trustee as a trustee in respect of the debentures
Abbreviations:
CDSL Central Depository Services (India) Limited DD Demand Draft DRR Debenture Redemption Reserve NOC No Objection Certificate(s) NEFT National Electronic Fund Transfer NSDL National Securities Depository Limited PAN Permanent Account Number RBI The Reserve Bank of India RS. Rupees RTGS Real Time Gross Settlement SEBI Securities And Exchange Board Of India SEZ Special Economic Zone TDS Tax Deduction At Source WDM Wholesale Debt Market segment of the BSE TSNHBV Tata Steel Netherlands Holdings BV
All other Capitalised Terms not defined above shall have the meaning assigned to them in the sections titled ‘Issuer Information’ and ‘Issue Details’ of this Disclosure Document.
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RISK FACTORS
An investment in Debentures involves risks. These risks may include, among others, equity market, bond market, interest rate, market volatility and economic, political and regulatory risks and any combination of these and other risks. Some of these are briefly discussed below. Potential Investors and subsequent purchasers of the Debentures should be experienced with respect to transactions in instruments such as the Debentures. Potential Investors and subsequent purchasers of the Debentures should understand the risks associated with an investment in the Debentures and should only reach an investment decision after careful consideration, with their legal, tax, accounting and other advisers, of (a) the suitability of an investment in the Debentures in the light of their own particular financial, tax and other circumstances and (b) the information set out in this Information Memorandum.
The Debentures may decline in value and marketability and Investors should note that, whatever their investment in the Debentures, the cash amount due at maturity will be equivalent to the face value of the Debentures. More than one risk factor may have simultaneous effect with regard to the Debentures such that the effect of a particular risk factor may not be predictable. In addition, more than one risk factor may have a compounding effect which may not be predictable. No assurance can be given as to the effect that any combination of risk factors may have on the value of the Debentures.
Risks Related to our Company and our Subsidiaries:
1. The steel industry is affected by global economic conditions. Slower than expected or uneven growth of the global economy or a renewed global recession could have a material adverse effect on the steel industry and us.
Our business and results of operations have been and continue to be affected by international, national and regional economic conditions. Fiscal year 2019 saw a mixed steel and raw material price performance, with steel prices globally corrected till November 2019 before rebounding from December 2019.
During last couple of years, policy led capacity cuts have led to improved utilization levels in China. This, coupled with strong domestic demand, has led to lower steel exports from China as compared to the previous year. During the year, the Indian automotive industry suffered from the liquidity crisis and weak global demand to show almost no growth which has impacted other allied sectors including steel. Indian steel demand during 2019 has grown approximately 5% (vs 8-9% growth in 2018); with a production of 111.2 Mn tons and consumption of ~101.6 Mn tons. Similarly, in economies like Europe, the steel demand has witnessed contraction. The consumer sectors and construction maintained positive momentum, however manufacturing slumped due to a deteriorating environment for export and investment. In 2020, with the effect of some technical rebound, steel demand in the developed world like Europe is expected to grow by 0.6 to 1%.
An uneven recovery, with positive growth limited to certain regions would have an adverse effect on our business, results of operations, financial condition and prospects. Continued financial weakness among substantial consumers of steel products, such as the automotive industry and the construction industry, or the bankruptcy of any large companies in such industries, would exacerbate the negative trend in market conditions.
2. The steel industry is highly cyclical and a decrease in steel prices may have a material adverse effect on our business, results of operations, prospects and financial condition.
Steel prices are volatile, reflecting the highly cyclical nature of the global steel industry. Steel prices fluctuate based on a number of factors, such as the availability and cost of raw material inputs, fluctuations in domestic and international demand and supply of steel and steel products, worldwide production and capacity, fluctuation in the volume of steel imports, transportation costs, protective trade measures and various social and political factors, in the economies in which the steel producers sell their products and are sensitive to the trends of particular industries, such as the automotive, construction, packaging, appliance, machinery, equipment and transportation industries, which are among the biggest consumers of steel products. When downturns occur in these economies or sectors, we may experience decreased demand for our products, which may lead to a decrease in steel prices, which may, in turn, have a material adverse effect on our business, results of operations, financial condition and prospects.
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Global steel prices fell sharply in 2008 as the global credit crisis led to a collapse in global demand. Also similar price falls happened in 2015, 2016 and in 2019. If there is weakness in sectors of the economy that are substantial consumers of steel products, such as the construction and automobile industries, it would also hurt steel producers. While steel prices have increased in in 2017, 2018 and in early 2019, they have been subject to fluctuation. Low steel prices adversely affect the businesses and results of operations of steel producers generally, including ours, resulting in lower revenue and margins and write downs of finished steel products and raw material inventories. In addition, the volatility, length and nature of business cycles affecting the steel industry have become increasingly unpredictable, and the recurrence of another major downturn in the industry may have a material adverse impact on our business, results of operations, financial condition and prospects.
In addition, substantial decreases in steel prices during periods of economic weakness have not always been balanced by commensurate price increases during periods of economic strength. Any sustained price recovery will most likely require a broad economic recovery, in order to underpin an increase in real demand for steel products by end users.
3. Overcapacity and oversupply in the global steel industry may adversely affect our profitability.
China is the largest steel producing country in the world by a significant margin, with the balance between its domestic production and demand being an important factor in the determination of global steel prices. In addition, Chinese steel exports may have a significant impact on steel prices in markets outside of China, including in the markets where we operate. Any production overcapacity and oversupply in the steel industry would likely cause increased competition in steel markets around the world which would likely lead to reduced profit margins for steel producers, and would also likely have a negative effect on our ability to increase steel production in general. No assurance can be given that we will be able to continue to compete in such an economic environment or that a prolonged stagnation of the global economy or production overcapacity will not have a material adverse effect on our business, results of operations, financial condition or prospects.
4. Developments in the competitive environment in the steel industry, such as consolidation among our competitors, could have a material adverse effect on our competitive position and hence our business, financial condition, results of operations or prospects.
We believe that the key competitive factors affecting our business include product quality, changes in manufacturing technology, workforce skill and productivity, cash operating costs, pricing power with large buyers, access to funding, the degree of regulation and access to low-cost raw materials. Although we believe that we are a competitive steel producer, we cannot assure prospective investors that we will be able to compete effectively against our current or emerging competitors with respect to each of these key competitive factors.
In the past, there have been instances of consolidation among our competitors. For example, the merger of Mittal Steel and Arcelor in 2006 created a company that continues to be the largest steel producer in the world. In 2012, Nippon Steel merged with Sumitomo Metal Corporation, creating the second largest steel producer in the world. In 2016, China’s Baosteel and Wuhan Iron and Steel formally merged and became second largest steel maker in the world in terms of volume. Recently in 2019, the JV of ArcelorMittal and Nippon Steel completed the acquisition of Essar Steel Limited establishing the foot print for both ArcelorMittal and Nippon Steel in India. Competition from global steel producers with expanded production capacities, new market entrants, especially from China and India, could result in significant price competition, declining margins and a reduction in revenue. For example, these companies may be able to negotiate preferential prices for certain products or receive discounted prices for bulk purchases of certain raw materials that may not be available to us.
Further, recent changes in India’s debt restructuring and insolvency laws, including the introduction of Insolvency and Bankruptcy Code, 2016, could also lead to consolidation among our competitors and new entrants in steel industry.
In addition, our competitors may have lower leverage and stronger balance sheets. Larger competitors may also use their resources, which may be greater than ours, against us in a variety of ways, including by making additional acquisitions, investing more aggressively in product development and capacity and displacing demand for our export products. The market is still highly fragmented, and if the trend towards consolidation continues, we could 11
be placed in a disadvantageous competitive position relative to other steel producers and our business, results of operations, financial condition and prospects could be materially and adversely affected. In addition, a variety of known and unknown events could have a material adverse impact on our ability to compete. For example, changes in the level of marketing undertaken by competitors, governmental subsidies provided to foreign competitors, dramatic reductions in pricing policies, exporters selling excess capacity from markets such as China, Ukraine and Russia, irrational market behavior by competitors, increases in tariffs or the imposition of trade barriers could all affect our ability to compete effectively. Any of these events could have a material adverse impact on our business, results of operations, financial condition and prospects.
5. The steel industry is characterized by a high proportion of fixed costs and volatility in the prices of raw materials and energy, including mismatches between trends in prices for raw materials and steel, as well as limitations on or disruptions in the supply of raw materials, which could adversely affect our profitability.
Steel production requires substantial amounts of raw materials and energy, including iron ore, coking coal and coke, scrap and power, which are subject to significant price volatility. The production of steel is capital intensive, with a high proportion of fixed costs to total costs. Consequently, steel producers generally seek to maintain high capacity utilization. If capacity exceeds demand, there is a tendency for prices to fall sharply if supply is largely maintained. Conversely, expansion of capacity requires long lead times so that, if demand grows strongly, prices increase rapidly, as unutilized capacity cannot be brought on line as quickly. The result can be substantial price volatility. While we have taken steps to reduce operating costs, such as entering into strategic joint ventures in India and overseas to secure supplies of raw materials and energy, we may be negatively affected by significant price volatility, particularly in the event of excess production capacity in the global steel market, and incur operating losses as a result.
Volatility in the prices of raw materials and energy, including mismatches between trends in prices for raw materials and steel, and limitations on, or disruptions in, supply of raw materials could adversely affect our profitability. The availability and prices of raw materials may be negatively affected by, among other factors, new laws or regulations; suppliers’ allocations to other purchasers; business continuity of suppliers; interruptions in production by suppliers; accidents or other similar events at suppliers’ premises or along the supply chain; wars, natural disasters and other similar events; fluctuations in exchange rates; consolidation in steel-related industries; the bargaining power of raw material suppliers and the availability and cost of transportation. Although our Indian operations source a portion of their iron ore and coal requirements from captive mines and also have new mines under development, we currently obtain a significant majority of our raw materials requirements, including all raw materials for our operations in Europe, under supply contracts or from the spot market. The raw materials industry is highly concentrated and suppliers in recent years have had significant pricing power. Further consolidation among suppliers would exacerbate this trend. Since 2010, raw materials suppliers began to move towards sales based on quarterly and monthly indexed prices rather than annually priced contracts under which steel producers face increased exposure to production cost and price volatility. This change may in turn reduce the steel producers’ access to reliable supplies of raw materials. Further, operations at some of our mines in India were disrupted in 2015 due to various reasons, including judicial orders and regulatory disputes. Such disruptions forced us to purchase iron ore and coal on spot basis or rely on imports, resulting in increased raw material costs.
In recent years, many steel companies have been focused on acquiring raw materials projects around the world in an effort to limit their exposure to the volatility and instability of the markets for raw materials. To the extent such companies use these raw materials in their own steel production, these acquisitions will further limit the supply of these raw materials available for purchase in the global markets. Any prolonged interruption in the supply of raw materials or energy, or failure to obtain adequate supplies of raw materials or energy at reasonable prices or at all, or increases in costs which we are unable to pass on to our customers, could have a material adverse effect on our business, financial condition, results of operations or prospects.
Despite the high correlation between steel and raw material prices, with both having experienced significant declines during the global economic crisis, there can be no assurance that this correlation will continue. If raw materials and energy prices rise significantly (either as a result of supply constraints or other reasons) but prices for steel do not increase commensurately, it would have a material adverse effect on our business, financial condition, results of operations and prospects.
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In addition, energy costs, including the cost of electricity and natural gas, represent a substantial portion of the cost of goods sold by steel producers generally, including us. Historically, energy prices have varied significantly, and this trend may continue due to market conditions and other factors beyond the control of steel producers. As the production of direct reduced iron and the re-heating of steel involve the use of significant amounts of energy, steel producers are sensitive to energy prices and are dependent on having access to reliable supplies. For example, we mothballed our steel processing plant at Llanwern, United Kingdom in 2015 due to high energy prices. Accordingly, even moderate increases in energy prices can have a significant effect on our business, financial condition, results of operations and prospects.
6. We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business.
Our outstanding gross indebtedness as of December 31, 2019 was ₹1,09,867 crore. Any downturn in the steel industry increases the possibility that we may be unable to generate cash sufficient to pay, when due, the principal of, interest on or other amounts due in respect of its indebtedness. In addition, as this debt matures, we may need to refinance or secure new debt which may not be available on favorable terms or at all. Recently we have refinanced our European debt through our subsidiary TSNHBV for loan facilities of EUR 1.75 billion. This facility has extended the maturity profile of the group debt. Post this approximately 3% of this outstanding indebtedness is due in Fiscal year 2020 and 1.62% in Fiscal year 2021, a portion of which may be refinanced by our Company through loans with longer tenors. Approximately 13% of this outstanding indebtedness matures before Fiscal year 2024 (including indebtedness maturing within one year).
Our high indebtedness levels, and other financial obligations and contractual commitments, may have other significant consequences for our business and results of operations, including:
• increased vulnerability to adverse changes in economic conditions, government regulation or the competitive environment;
• diversion of our cash flow from operations to payments on our indebtedness and other obligations and commitments, thereby reducing the availability of our cash flows to fund working capital, capital expenditure, acquisitions and other general corporate purposes;
• limiting additional borrowings for working capital, capital expenditure, acquisitions, debt refinancing service requirements, execution of its business strategy or other purposes;
• impairing our ability to pay dividends in the future; and
• exacerbating the impact of foreign currency movements on our profitability and cash flows.
A significant portion of our indebtedness has been incurred by our Company’s subsidiaries, including Tata Steel Europe Limited (“TSE”). Our Company may be required, under various financing arrangements, to provide financial resources to support such subsidiaries under their existing and future indebtedness. Our Company has provided financial support to TSE and other subsidiaries in the past and there can be no assurance that we will not be required to contribute additional funds to reduce the outstanding debt or otherwise provide substantial support to our subsidiaries in the future.
In addition, our high indebtedness levels, and other financial obligations and contractual commitments could lead to a downgrade of its credit rating by international and domestic rating agencies, thereby adversely impacting our ability to raise additional financing and the interest rates and commercial terms on which such additional financing is available.
We may incur additional borrowings in the future, including by way of issuing bonds. Our inability to meet our debt service obligations and repay our outstanding indebtedness depends primarily on the revenue generated by our business. We cannot assure you that we will generate sufficient revenues to service existing or proposed borrowings or fund other liquidity needs.
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7. Mining operations are subject to substantial risk, including those related to operational hazards and environmental issues.
We currently operate several iron ore and coal mines in India and have an interest in mines in Mozambique and Canada. We may substantially increase the scope of our mining activities in the future. These operations are subject to hazards and risks normally associated with the exploration, development and production of natural resources including industrial accidents, such as explosions, fires, transportation interruptions and inclement weather. The occurrence of any of these events, or similar events, could delay production, increase production costs and result in death or injury to persons, damage to property and liability for us, some or all of which may not be covered by insurance, as well as substantially harm our reputation.
These operations are also subject to hazards and risks relating to negative environmental consequences such as those resulting from tailings and sludge disposal, effluent management and disposal of mineralized waste water and rehabilitation of land disturbed during mining processes. In addition, environmental awareness throughout the world, including in India and other emerging markets, has grown significantly in recent years, and opposition to mining operations have also increased due to the perceived negative impact they have on the environment. Public protests over our mining operations could cause operations to slow down, damage our reputation and goodwill with the governments or public in the countries and communities in which we operate, or cause damage to our facilities. Public protest could also affect our ability to obtain necessary licenses to expand existing facilities or establish new operations. Consequently, negative environmental consequences as well as public opposition to our current or planned mining operations could have a material adverse effect on our results of operations and financial condition.
8. Our estimates of our Indian mineral reserves and the mineral reserves of our other mining investments are subject to assumptions, and if the actual amounts of such reserves are less than estimated, or if we are unable to gain access to sufficient mineral reserves, our results of operations and financial condition may be adversely affected.
Our estimates of our iron ore and coal resources, including in India, Canada and Mozambique are subject to probabilistic assumptions based on interpretations of geological data obtained from sampling techniques and projected rates of production in the future. In addition, no independent third-party reports have been generated to ascertain the level of mineral reserves located at certain of our existing and potential mining sites. Actual reserves and production levels may differ significantly from reserve estimates. Furthermore, it may take many years from the initial phase of exploration before production is possible during which time the economic feasibility of exploiting such reserves may change. There can be no assurance that commercial levels of raw materials will be discovered or that the mines will produce raw materials at the estimated amounts or at all.
If mineral reserves or the quality of such reserves are overestimated, the level of viable reserves would be lower than expected, and we may be forced to purchase such minerals in the open market. Prices of minerals in the open market may significantly exceed the cost at which we might otherwise be able to extract these minerals, which would cause costs to increase and consequently adversely affect our businesses, results of operations, financial condition and prospects.
9. Our leased mines are valuable to our operations and consequently if we are unable to renew any lease or obtain new lease rights we may be required to purchase such minerals for higher prices in the open market or pay escalated royalties for the existing leases which may negatively impact our results of operations and financial condition.
We extract minerals in India pursuant to mining leases from state governments in the areas in which such mines are located including leases for iron ore mines at Noamundi, Joda and Khondbond and coal mines at West Bokaro, Odisha and Jamadoba, Jharkhand. These leases are granted under the Mines and Minerals (Development and Regulation) Act, 1957 and the Mines and Minerals (Development and Regulation) Amendment Act, 2015. In addition, we have plans to increase the scope of our mining activities pursuant to new leases with the state governments in Odisha and Jharkhand. Our current leases have been extended (disputes in respect of renewal of the lease for the mines at Noamundi is being contested by our Company based on interpretation of the Mines and Minerals (Development and Regulation) Amendment Act, 2015) and the extension is subject to the lessee not 14
being in breach of any applicable laws and complying with such other conditions as the relevant governmental authorities may impose.
If our mining leases in India are not extended, or are renegotiated on terms that are less favorable, or no new leases are made available, or royalties charged against our leases are increased, we may be forced to purchase such minerals in the open market or pay increased royalties. If prices in the open market exceed the cost at which we might otherwise be able to extract these minerals or there is an increase in royalties payable, our costs would increase and our business, results of operations, financial condition and prospects would be materially and adversely affected.
10. Inability to obtain, renew or maintain the statutory and regulatory permits, licenses and approvals required to operate our business could have a material adverse effect on our business.
We require certain statutory and regulatory permits, licenses and approvals for our business in each of the jurisdictions in which we operate. There can be no assurance that the relevant authorities will issue such permits or approvals in the time frame anticipated by us or, at all.
If we are unable to obtain and maintain the requisite licenses in a timely manner or at all, or to renew or maintain existing permits or approvals, or comply with the terms and conditions prescribed in such permits or approvals, it may result in the interruption of our operations (including suspension or termination of its mining leases) and may have a material adverse effect on our business, financial condition and results of operations.
11. Our FAMD mines are expected to expire on March 31, 2020. There can be no assurance that company might get those mines in auction which can impact the profitability of the Company.
FAMD has been pioneering Chrome business in India with the starting of Sukinda Chromite Mine in 1950s. FAMD has set up an integrated value chain commencing with mining, beneficiation, production and sales of Chrome ore and Ferrochrome (FeCr) alloys. With the amendment in MMDR Act in January 2015, the leases which were granted before the MMDR (Amendment) act, 2015 and has already completed 50 years lease period, will expire by March 31, 2030 for leases meant for captive purpose and leases which are meant for non-captive purpose will expire by March 31, 2020. Sukinda Chromite Mine (SCM) lease held by Tata Steel falls in the category of non-captive lease and hence will expire on March 31, 2020. On January 22, 2020 Government of Odisha had notified the Sukinda Chromite block (currently held by Tata Steel) expiring on March 31, 2020 for commercial mining purpose. Tata Steel is participating in the auctions for Chromite & Iron Ore mines announced by Government of Odisha. However, there is no assurance that Tata Steel will get the mines which might impact the profitability of the Company.
12. We face risks relating to our joint ventures.
We have also entered into, and may from time to time in the future enter into, joint venture agreements, including for raw material projects. We may have limited control of these projects and therefore may be unable to require that our joint ventures sell assets or return invested capital, make additional capital contributions or take any other action. If there is a disagreement between us and our partners in a joint venture regarding the business and operations of the project, there can be no assurance that we will be able to resolve such disagreement in a manner that will be in our best interests or at all. Certain major decisions, such as selling a stake in the joint project, may require the consent of all other partners. These limitations may adversely affect our ability to obtain the economic and other benefits we seek from participating in these projects. In addition, our joint venture partners may have economic or business interests or goals that are inconsistent with ours; take actions contrary to our instructions, requests, policies or objectives; be unable or unwilling to fulfill their obligations; withdraw technology licenses provided to us; have financial difficulties; or have disputes as to their rights, responsibilities and obligations. Our joint venture partners may also enter into business partnerships with our competitors after the expiry of applicable non-compete periods, if any. Any of these and other factors may have a material adverse effect on our joint venture projects, which may in turn materially and adversely affect our business, results of operations, financial condition and prospects.
13. We face risks relating to the restructuring of our European operations. 15
We are currently in the process of restructuring our European operations in order to increase efficiency in servicing the European markets, which may include “The transformation program” to make business stronger and more sustainable with focus on boosting productivity, reducing bureaucracy, and increasing sales of higher-value steel product. Such restructuring and transformation activities may include, amongst other things, entering into joint venture agreements, undertaking mergers or debt restructurings of our European operations, cost cutting activities This may result in a reduction of our overall production capacity in Europe. There can be no assurances that such restructuring exercises or transformation programs would result in an increase in efficiency as envisaged by us. There may be external factors such as a delay in obtaining regulatory approvals, dead-locks in negotiations and labor disputes which may hinder our restructuring and transformation exercises. This may adversely affect our business, results of operations, financial condition and prospects.
14. Our UK business has separated from the BSPS and the majority of BSPS members have completed a consensual transfer exercise to a new scheme sponsored by Tata Steel UK Ltd.
On March 31, 2017 the British Steel Pension Scheme (“BSPS”) was closed to future accrual and replaced by a defined contribution scheme. On September 11, 2017 the BSPS separated from Tata Steel UK Ltd and a number of affiliated companies by way of a Regulated Apportionment Arrangement (“RAA”). Tata Steel UK Ltd has also agreed to sponsor a proposed new pension scheme (“BSPS2”), to which BSPS members were given a choice to transfer (or stay with the BSPS which would fold into the Pension Protection Fund eventually). The consent process was completed by March 2018. The new Scheme/ BSPS2 has been formed with a substantial surplus. It has lower risk relative to the erstwhile BSPS and it is not expected that additional cash contributions will be necessary to make into this scheme. However there is no assurance that the fund gets into deficit due to economic risks, demographic risks, interest rate risks and inflation risks.
15. Europe is one of our largest market, and our current business and future growth could be materially and adversely affected by economic conditions in Europe.
Europe is a significant market, accounting for approximately 41% and 48% of our revenue in each of the Fiscals 2019 and 2018, respectively. Sales of our products in Europe are affected by the condition of major steel consuming industries, such as the automobile, infrastructure and construction sectors, and the European economy in general. In addition, a significant part of our operations and assets are located in Europe.
Euro area is registered a growth rate of 1.4% in 2019 down from 2.3% in 2018, before rebounding to 1.8% in 2020. The UK left EU on January 31, 2020 (“Brexit”). This could raise tariffs and cause inflation. Also EU and UK will negotiate a trade agreement that will probably impose tariffs on each other's imports. Brexit could damage the UK economic growth. This tighter financial conditions in Europe could have adverse spill-over effect on global growth.
Any further tighter financial conditions in US, Europe or China is likely to have adverse spill-over effect on global growth. The effect of Brexit is likely to impact the pace of recovery in UK as well as the Eurozone economy, especially if a no deal Brexit happens.
These and other related events have had a significant impact on the global credit and financial markets as a whole, including reduced liquidity, greater volatility, widening of credit spreads and a lack of price transparency in the United States, Europe and global credit and financial markets. In response to such developments, legislators and financial regulators in the United States, Europe and other jurisdictions, including India, have implemented several policy measures designed to add stability to the financial markets. In addition, any announcement by the United State Federal Reserve to increase interest rates may lead to an increase in the borrowing costs in the United States and may impact borrowing globally as well. Further, in several parts of the world, there are signs of increasing retreat from globalisation of goods, services and people, as pressures for protectionism are building up and such developments could have the potential to affect exports from India.
The United Kingdom’s decision to leave the European Union has increased economic uncertainty and is expected to impact the level of investment activity and the pace of recovery for both the United Kingdom and the Eurozone economy. Any future deterioration of the European and global economy could adversely affect the Group’s 16
business, financial condition, results of operations and prospects.
16. Changes in assumptions underlying the carrying value of certain assets, including as a result of adverse market conditions, could result in impairment of such assets, including intangible assets such as goodwill.
We review the carrying amounts of our tangible and intangible assets (including investments) to determine whether there is any indication that the carrying amount of those assets may not be recoverable through continuing use.
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. We make a number of significant assumptions and estimates when applying the impairment test, including in estimation of the net present value of future cash flows attributable to assets or cash generating units. The actual results or performance of these assets or cash generating units could differ from estimates used to evaluate the impairment of assets. In the event that the recoverable amount of any cash- generating unit is less than the carrying amount of the unit, the impairment loss will first be allocated to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit in proportion to the carrying amount of each asset in the unit. However, the decrease in recoverable amount of assets is not conclusively indicative of a long-term diminution in value of the assets.
While impairment does not affect reported cash flows, the decrease in estimated recoverable amount, as well as, the related non-cash charge in the consolidated statement of profit and loss could have a material adverse effect on our financial results or on key financial ratios. Since the 2008 financial crisis, our businesses, including European operations, have been under severe pressure, and we have recognized non-cash write downs of goodwill and assets in connection with these operations. Many of our peers in the steel industry have taken substantial impairment charges in their accounts for their most recent financial year.
Impairment loss recognized in respect of property, plant and equipment (including capital work-in-progress) and intangible assets for the year ended March 31, 2019 was Rs. 182 crores (year ended March 31, 2018 was Rs. 1,161.93 crores).
In accordance with our policy, impairment review is conducted only at the end of the last quarter of the financial year. There can be no assurance that we will not be required to take impairment charges in Fiscal 2020, in relation to our operations or elsewhere, or thereafter and, if taken, such charges may be significant. Any future impairment charges may adversely impact our financial covenants, liquidity position and results of operations.
17. The production of steel is capital intensive, with long gestation periods.
The production of steel is capital intensive, with a high proportion of investment in fixed assets such as land, plant and machinery. Further, setting up of new capacities or expansion of existing capacities require long lead times. If total capacity in the industry exceeds demand, there is a tendency for prices to fall sharply if supply is largely maintained. Conversely, if demand grows strongly, prices increase rapidly, as unutilized capacity cannot be brought on line as quickly. The result can be substantial price volatility. While we have taken steps to reduce operating costs, we may be negatively affected by significant price volatility, particularly in the event of excess production capacity in the global steel market, and incur operating losses as a result.
18. If we are unable to successfully implement our growth strategies, our results of operations and financial condition could be adversely affected.
As part of its future growth strategy, the Company plans to expand its steelmaking capacity through a combination of brownfield growth, new greenfield projects and acquisition opportunities and to focus this additional capacity on the increased production of high-value products. The Company has acquired Bhushan Steel through its subsidiary, Bamnipal Steel Limited, acquired Usha Martin’s steel business through Tata Steel Long products Limited (erstwhile Tata Sponge Iron Limited) and initiated the expansion of Kalinganagar Phase-2 and other expansion projects. The majority of these projects are aimed at increasing the size of its Indian operations. Each of these expansion projects are significant increases to the Company’s historical production capacity in India. These projects, and a number of other expansion projects, to the extent that they proceed, would involve risks, 17
including risks associated with the timely completion of these projects, and failure by the Company to adequately manage these risks notwithstanding its upgraded operational and financial systems, procedures and controls could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects. Factors that could affect the Company’s ability to complete these projects include receiving financing on reasonable terms, obtaining or renewing required regulatory approvals and licenses, delays in land acquisitions, a decline in demand for the Company’s products and general economic conditions. For example, the Company’s Odisha project during its Phase-1 has experienced delays primarily associated with land acquisition, licenses and construction delays due to extreme weather conditions. Delays associated with land acquisitions and obtaining various licenses and approvals require the coordination and cooperation of various governmental agencies and third parties that are outside the control of the Company. In many cases, even though the Company has paid for or applied for acquisitions, services or licenses, delays associated with the responsiveness of counterparties have been one of the key reasons for construction delays. To accommodate this growth, the Company has needed to implement a variety of new and upgraded operational and financial systems, procedures and controls, including the improvement of its accounting and other internal management systems, all of which require substantial management time and effort. In this regard, the Company established a Committee to consider and approve the placing of large orders of equipment, plant and machinery and to monitor the progress of projects. In addition, the feasibility of the Company’s growth strategies are also dependent upon the ability of the Company to negotiate extensions of memorandums of understanding with the relevant state governments, obtain new iron ore mining leases from the relevant state governments and on certain political factors including the resettlement and rehabilitation of people living on the land to be used in a project. Any of these factors may cause the Company to delay, modify or forego some or all aspects of its expansion plans. In addition, certain brownfield expansions have required the temporary shut-down of operations at the particular facility being upgraded. During these periods, the Company could experience reduced production volumes which could translate into reduced sales volumes. This could have a direct negative impact on revenue and operating results for such period. Consequently, the Company cannot assure prospective investors that it will be able to execute these projects and, to the extent that they proceed, that it will be able to complete them on schedule or within budget. In addition, there can be no assurance that the Company will be able to achieve its goal of increasing the production of high-value products or that it will otherwise be able to achieve an adequate return on its investment. Failure to do so could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.
19. If industry-wide steel inventory levels are high, customers may draw from inventory rather than purchase new products, which would reduce our sales and earnings.
Above-normal industry inventory levels can cause a decrease in demand for our products and thereby adversely impact our earnings. High industry-wide inventory levels of steel reduce the demand for production of steel because customers can draw from inventory rather than purchase new products. This reduction in demand could result in a corresponding reduction in prices and sales, both of which could contribute to a decrease in earnings. Industry-wide inventory levels of steel products can fluctuate significantly from period to period.
20. We are subject to certain restrictive covenants in our financing arrangements which may limit operational and financial flexibility, and failure to comply with these covenants may have a material adverse effect on our future results of operations and financial condition.
Certain of our financing arrangements include covenants to maintain certain debt to equity ratios, debt coverage ratios and certain other liquidity and profitability ratios. There can be no assurance that such covenants will not hinder business development and growth. In the event that we breach any covenants under our financing arrangements or requisite consents/waivers cannot be obtained, the outstanding amounts due under such financing agreements could become due and payable immediately. A default under one of these financing agreements may also result in cross-defaults under other financing agreements and result in the outstanding amounts under such financing agreements becoming due and payable immediately. Defaults under one or more of our financing agreements could have a material adverse effect on our business, results of operations, financial condition and prospects.
Some of our financing agreements and debt arrangements set limits on or require us to obtain lender consents before, among other things, undertaking certain projects, issuing new securities, changing our business, merging, consolidating, selling significant assets or making certain acquisitions or investments. In the past, we have been 18
able to obtain required lender consents for such activities. However, there can be no assurance that we will be able to obtain such consents in the future. If our financial or growth plans require such consents, and such consents are not obtained or other condition or covenant under our financing agreements is not waived by the lender, we may be forced to forgo or alter our plans, which could adversely affect our results of operations, financial condition and prospects.
In addition, certain covenants may limit our ability to raise incremental debt or to provide collateral.
21. Our contingent liabilities could adversely affect our financial condition.
We have created provisions for certain contingent liabilities in our financial statements. There can be no assurance that we will not incur similar or increased levels of contingent liabilities in the current Fiscal or in the future and that our existing contingent liabilities will not have material adverse effect on our business, financial condition and results of operations.
22. We may not be able to obtain adequate funding required to carry out our future plans for growth.
Disruptions in global credit and financial markets and the resulting governmental actions around the world could have a material adverse impact on our ability to meet funding needs. We require continuous access to large quantities of capital in order to carry out day-to-day operations. We have historically required, and in the future expect to require, outside financing to fund capital expenditure needed to support the growth of our business (including the additional operational and control requirements of this growth) as well as to refinance our existing debt obligations and meet our liquidity requirements.
In the event of adverse market conditions, or if actual expenditure exceeds planned expenditure, our external financing activities and internal sources of liquidity may not be sufficient to support current and future operational plans, and we may be forced to, or may choose to, delay or terminate the expansion of the capacity of certain of its facilities or the construction of new facilities. Our ability to arrange external financing and the cost of such financing, as well as our ability to raise additional funds through the issuance of equity, equity-related or debt instruments in the future, is dependent on numerous factors. These factors include general economic and capital market conditions, interest rates, credit availability from banks or other lenders, investor confidence in us, our success, provisions of tax and securities laws that may be applicable to our efforts to raise capital, the political and economic conditions in the geographic locations in which we operate, the amount of capital that other entities may seek to raise in the capital markets, the liquidity of the capital markets and our financial condition and results of operations.
There can be no assurance that we will be able to obtain bank loans or renew existing credit facilities granted by financial institutions in the future on reasonable terms or at all or that any fluctuation in interest rates will not adversely affect its ability to fund required capital expenditure. We may be unable to raise additional equity on terms or with a structure that is favorable, if at all. If we are unable to arrange adequate external financing on reasonable terms, our business, operations, financial condition and prospects may be adversely and materially affected.
23. We operate a global business and its financial condition and results of operations are affected by the local conditions in or affecting countries where it operates.
We operate a global business and have facilities in the United Kingdom, the Netherlands, India, Thailand, Singapore, Canada and Mozambique. As a result, our financial condition and results of operations are affected by political and economic conditions in or affecting countries where we operate.
We face a number of risks associated with our operations, including: challenges caused by distance, local business customs, languages and cultural differences, adverse changes in laws and policies, including those affecting taxes and royalties on energy resources. In September, 2014, royalty rates on iron ores in India were increased, which had a temporary adverse impact on the Group’s profitability, as there was a lag in passing this cost through to customers. Other risks may be relating to labor, local competition law regimes, environmental compliance and investments, difficulty in obtaining licenses, permits or other regulatory approvals from local authorities; adverse 19
effects from fluctuations in exchange rates; multiple and possibly overlapping and conflicting standards and practices of the regulatory, tax, judicial and administrative bodies of the relevant foreign jurisdiction; political strife, social turmoil or deteriorating economic conditions; military hostilities or acts of terrorism; and natural disasters, including earthquakes in India and flooding and tsunamis in Southeast Asia, and epidemics or outbreaks such as corona virus, avian flu, swine flu or severe acute respiratory syndrome. In addition, the infrastructure of certain countries where we operate businesses, in particular, India and Thailand is less developed than that of many developed nations and problems with its port, rail and road networks, electricity grid, communication systems or any other public facility could disrupt our normal business activities.
Investments in certain countries could also result in adverse consequences to us under existing or future trade or investment sanctions. The effect of any such sanctions could vary, but if sanctions were imposed on us or on India, there could be a material adverse impact on the market for our securities or it could significantly impair our ability to access the U.S. or international capital markets.
Any failure on our part to recognize and respond to these risks may materially and adversely affect the success of our operations, which in turn could materially and adversely affect our business, results of operations, financial condition and prospects.
24. A substantial and increasing portion of our revenues is derived from India and consequentially we are exposed to risks associated with economic conditions in India.
India is principally the largest market for our operations and contributed approximately 56% of our revenue on a consolidated basis in Fiscal 2019. A significant and ever-increasing portion of our revenue is generated in India especially post acquisition of Bhushan Steel and Steel division of Usha Martin Limited. Existing and potential competitors may increase their focus on India, which could reduce our market share. For example, our competitors may intensify their efforts to capture a larger market share by undertaking aggressive pricing strategies and increasing their focus on product development. Investors in emerging markets such as India should be aware that these markets are subject to various risks, including in some cases significant legal, economic and political risks. In addition, adverse political or economic developments in other Asian countries could have a significant negative impact on, among other things, India’s GDP, foreign trade and economy in general. Investors should note that emerging markets, including India, are subject to rapid change and information contained in this document may quickly become outdated. Investors should exercise particular care in evaluating risks involved and must decide for themselves whether, in light of those risks, an investment in the NCD is appropriate.
25. The unexpected loss, shutdown or slowdown of operations at any of our facilities could have a material adverse effect on our results of operations and financial condition.
Our facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply interruptions, facility obsolescence or disrepair, labor disputes, natural disasters and industrial accidents. The occurrence of any of these risks could affect our operations by causing production at one or more facilities to shut down or slowdown. No assurance can be given that one or more of the factors mentioned above will not occur, which could have a material adverse effect on our results of operations and financial condition.
In addition, our manufacturing processes depend on critical pieces of steelmaking equipment. Such equipment may, on occasion, be out of service as a result of unanticipated failures, which could require us to close part or all of the relevant production facility or cause production reductions on one or more of our production facilities. Our facility and equipment would be difficult and expensive to replace on a timely basis. Any interruption in production may require significant and unanticipated capital expenditure to affect repairs, which could have a negative effect on profitability and cash flows. Although we maintain business interruption insurance, the recoveries under our insurance coverage may be delayed or may not be sufficient to offset the lost revenues or increased costs resulting from a disruption of our operations. A sustained disruption to our business could also result in a loss of customers. Any or all of these occurrences could result in the temporary or long-term closure of our facilities, severely disrupt our business operations and materially adversely affect our business, results of operations, financial condition and prospects.
26. Costs related to our obligations to pension and other retirement funds could escalate, thereby adversely 20
affecting our results of operations and financial condition.
We have significant pension and other retirement obligations to our employees. The relevant European Group entities, most materially in the UK and the Netherlands, provide retirement benefits for substantially all of their respective employees under several defined benefit and defined contribution plans. UK defined benefit pension contributions are calculated by independent actuaries using various assumptions about future events. The actuarial assumptions used may differ from actual future results due to changing market and economic conditions, higher or lower withdrawal rates, longer or shorter life spans of participants or other unforeseen factors. These differences may impact the actual net pension expense and liability, as well as future funding requirements.
27. We face numerous protective trade restrictions, including anti-dumping laws, countervailing duties and tariffs, which could adversely affect its results of operations and financial condition.
Protectionist measures, including anti-dumping laws, countervailing duties and tariffs and government subsidization adopted or currently contemplated by governments in some of our export markets could adversely affect our sales. Anti-dumping duty proceedings or any resulting penalties or any other form of import restrictions may limit our access to export markets for its products, and in the future additional markets could be closed to us as a result of similar proceedings, thereby adversely impacting our sales or limiting our opportunities for growth.
Tariffs are often driven by local political pressure in a particular country and therefore there can be no assurance that quotas or tariffs will not be imposed on us in the future. In the event that such protective trade restrictions are imposed on us, our exports could decline. Additionally, there can be no assurance that the Group will benefit from trade restrictions that protect the markets in which it produces the majority of its products, being India and Europe. Foreign steel manufacturers may, as a result of trade restrictions in other regions or other factors, attempt to increase their sales in these markets thereby causing increased competition in India and Europe. A decrease in exports from India and Europe or an increase in steel imports to India and Europe as a result of protective trade restrictions could have a negative impact on our business, financial condition, results of operations and prospects. Our Group does avail itself to certain conditional concessionary arrangements with respect to trade that may impose conditions on us which could lead to penalties if such conditions are not met.
28. Any change in existing government policies providing support to steel manufactures, or new policies withdrawing support presently available could adversely affect our business and results of operations.
FAny change in existing government policies providing support to steel manufactures, or new policies withdrawing support presently available, in the jurisdictions in which we have operations could adversely affect the supply and demand balance and the competitive environment. For example, in February, 2016, the Government of India announced a minimum import price on 173 steel products to prevent dumping of steel products. Subsequently, the minimum import price was discontinued and the Government of India imposed anti-dumping duties on steel products with effect from August, 2016 for a period of five years. Similarly, in February 2016, the European Union announced provisional anti-dumping duties on cold-rolled flat steel from China and Russia. If any such measures are withdrawn or not renewed upon expiry, it may adversely affect the competitive environment and we cannot assure that we would be able to pass on any resultant increase in costs to our customers, which could adversely affect our business and results of operations.
G 29. Environmental matters, including compliance with laws and regulations and remediation of contamination, could result in substantially increased capital requirements and operating costs.
Our businesses are subject to numerous laws, regulations and contractual commitments relating to the environment in the countries in which it operates and our operations generate large amounts of pollutants and waste, some of which are hazardous. These laws, regulations and contractual commitments concern air emissions, wastewater discharges, solid and hazardous waste material handling and disposal, and the investigation and remediation of contamination or other environmental restoration. The risk of substantial costs and liabilities related to compliance with these laws and regulations is an inherent part of our business. Facilities currently or formerly owned or operated by us, or where wastes have been disposed or materials extracted, are all subject to risk of environmental cost and liabilities, which includes the costs or liabilities relating to the investigation and remediation of past or present contamination or other environmental restoration. In addition, future conditions 21
and contamination may develop, arise or be discovered that create substantial environmental compliance, remediation or restoration liabilities and costs despite our efforts to comply with environmental laws and regulations, violations of such laws or regulations can result in civil and/or criminal penalties being imposed, the suspension of permits, requirements to curtail or suspend operations, lawsuits by third parties and negative reputational effects. There can be no assurance that substantial costs and liabilities will not be incurred in the future.
An increase in the requirements of environmental laws and regulations, increasingly strict enforcement thereof by governmental authorities, or claims for damages to property or injury to persons resulting from the environmental impacts of our operations or past contamination, could prevent or restrict some of our operations, require the expenditure of significant funds to bring us into compliance, involve the imposition of cleanup requirements and reporting obligations, and give rise to civil and/or criminal liability.
There can be no assurance that any such legislation, regulation, enforcement or private claim will not have a material adverse effect on our business, financial condition or results of operations. In the event that production at one of our facilities is partially or wholly disrupted due to this type of sanction, our business could suffer significantly and our results of operations and financial condition could be materially and adversely affected.
In addition, our current and future operations may be located in areas where communities may regard our activities as having a detrimental effect on their natural environment and conditions of life. Any actions taken by such communities in response to such concerns could compromise our profitability or, in extreme cases, the viability of an operation or the development of new activities in the relevant region or country.
30. Our steel manufacturing operations are hazardous processes that can cause personal injury and loss of life, severe damage to property and equipment as well as environmental damage, which could cause us to incur significant costs and liabilities and may damage our reputation.
We are subject to a broad range of health and safety laws and regulations in each of the jurisdictions in which we operate. These laws and regulations, as interpreted by the relevant agencies and the courts, impose increasingly stringent health and safety protection standards. The costs of complying with, and the imposition of liabilities pursuant to, health and safety laws and regulations could be significant, and failure to comply could result in the imposition of civil and/or criminal penalties, the suspension of permits or operations and lawsuits by third parties.
Despite our efforts to monitor and reduce accidents at our facilities, there remains a risk that health and safety incidents may occur. Such incidents could include explosions or gas leaks, fires or collapses in underground mining operations, vehicular accidents and other incidents involving mobile equipment or exposure to potentially hazardous materials. Due to the nature of our business, certain incidents can and do result in employee fatalities. Some of our industrial activities involve the use, storage and transportation of dangerous chemicals and toxic substances, and we are therefore subject to the risk of industrial accidents which could have significant adverse consequences for our workers and facilities, as well as the environment. Such incidents could lead to production stoppages, the loss of key assets, or put employees at risk (and those of sub-contractors and suppliers) or persons living near affected sites. In addition, such incidents could damage our reputation, leading to the rejection of products by customers, devaluation of the “Tata” brand and diversion of management time into rebuilding and restoring its reputation.
31. Our operating results are affected by movements in exchange rates and interest rates.
There has been considerable volatility in foreign exchange rates in recent years, including rates between the Euro, the Rupee, the U.S. Dollar, the Japanese yen and other major foreign currencies. To the extent that we incur costs in one currency and generate sales in another, the profit margins may be impacted by changes in the exchange rates between the two currencies. The sales from our European operations are denominated mainly in Euro, and sales from our Indian operations are primarily in Rupees. However exports from India have increased significantly in recent years, which are mainly denominated in U.S. Dollars. The raw material purchases for our European operations are denominated mainly in U.S. Dollars while employee related expenses and other costs are primarily denominated in British pounds and Euros. The costs of our Indian operations are primarily in Rupees although our revenue and capital goods imports, are mainly denominated in U.S. Dollars and to a lesser extent in Euros 22
and the Japanese Yen, among others. Our Group’s Indian operations have debt denominated in foreign currency, while the imports of our Indian operations that are denominated in U.S. Dollars currently exceed our exports denominated in U.S. Dollars on an annual basis. In addition, because of ongoing growth projects in India for which we expect to incur significant capital expenditure, including the purchase of steel production equipment, we are expected to have imports on our capital account in Euros, U.S. Dollars, British pound and Japanese yen. The Group has hedging policies that help minimize the volatility in cash flows, however, fluctuations in exchange rates, in particular between the Euro and the British pound, Euro and the U.S. Dollar, Rupee and the U.S. Dollar and Rupee and the Japanese yen, may impact our profit margins and revenue from operations.
We book forward contracts on a rolling basis to hedge currency mismatches in our European business. For other exposures, we maintain a policy of booking forward contracts to hedge exposures once they are crystallized. The Group has hedging policies that permit the use of different hedging instruments including forward contracts, option contracts among other derivatives to hedge risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions, changes in exchange rates may nevertheless have a material and adverse effect on our business, results of operations, financial condition and prospects.
As at March 31, 2019, our indebtedness included outstanding floating-rate debt in the amount of ₹ 55,246 crore. If interest rates rise, interest payable on this debt will also rise, thereby increasing our interest expense and cost of new financing. Such a rise in interest rates may therefore materially and adversely affect our cash flow, business, results of operations, financial condition and results of operations.
32. Competition from other materials, or changes in the products or manufacturing processes of customers that use our steel products, could reduce market prices and demand for steel products and thereby reduce our cash flow and profitability.
In many applications, steel competes with other materials that may be used as substitutes, such as aluminum (particularly in the automobile industry), cement, composites, glass, plastic and wood. Government regulatory initiatives mandating or creating incentives for the use of such materials in lieu of steel, whether for environmental or other reasons, as well as the development of other new substitutes for steel products, could significantly reduce market prices and demand for steel products and thereby reduce our cash flow and profitability.
In addition, the steel market is characterized by evolving technology standards that require improved quality, changing customer specifications and wide fluctuations in product supply and demand. The products or manufacturing processes of the customers that use our steel products may change from time to time due to improved technologies or product enhancements. These changes may require us to develop new products and enhancements for our existing products to keep pace with evolving industry standards and changing customer requirements. If we cannot keep pace with market changes and produce steel products that meet its customers’ specifications and quality standards in a timely and cost-effective manner, its business, results of operations, financial condition and prospects could be materially adversely affected.
33. We have undertaken, and may undertake in the future, strategic acquisitions, which may be difficult to integrate, and may end up being unsuccessful.
We have in the past pursued, and may from time to time pursue in the future, acquisitions. From 2005 to 2007, we acquired operations in Europe through the acquisition of Corus as well as operations in Thailand, Singapore, China, Vietnam, India through the acquisitions of Tata Steel Thailand and NatSteel and operations in India through acquisition of Bhushan Steel and the steel division of Usha Martin in India. These acquisitions posed significant logistical and integration issues for us, as we had no previous experience in managing substantial foreign companies or large-scale international operations.
Our ability to achieve the anticipated benefits from future acquisitions will depend in large part upon whether we are able to integrate the acquired businesses into the rest of the group in an efficient and effective manner. The integration of acquired businesses and the achievement of synergies require, among other things, coordination of business development and procurement efforts, manufacturing improvements and employee retention, hiring and training policies, as well as the alignment of products, sales and marketing operations, compliance and control procedures, research and development activities and information and software systems. Any difficulties 23
encountered in combining operations could result in higher integration costs and lower savings than expected. Integration of certain operations also requires the dedication of significant management resources, and time and costs devoted to the integration process may divert management’s attention from day to day business.
The Company has acquired Bhushan Steel Limited though its subsidiary, Bamnipal Steel Limited, acquired Steel division of Usha Martin Limited through subsidiary Tata Steel Long Products Limited (Erstwhile Tata Sponge Iron Limited) and initiated the expansion of Kalinganagar Phase-2 and other expansion projects. The majority of these projects are aimed at increasing the size of its India. Each of these expansion projects are significant increases to the Company’s historical production capacity in India. These projects, and a number of other expansion projects, to the extent that they proceed, would involve risks, including risks associated with the timely completion of these projects, and failure by the Company to adequately manage these risks notwithstanding its upgraded operational and financial systems, procedures and controls could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.
34. Labor problems could adversely affect our results of operations and financial condition.
Most of our employees in India, and a substantial portion of our employees in Europe, other than management, are members of labor unions and are covered by collective-bargaining agreements with those labor unions, which have different terms at different locations and are subject to periodic renegotiation. Although we work to maintain good relations with unions, there can be no assurance that there will be no labor unrest in the future, which may delay or disrupt our operations. If strikes, work stoppages, work slow-downs or lockouts at our facilities occur or continue for a prolonged period of time, our business, results of operations, financial condition and prospects could be adversely affected.
35. Our insurance policies provide limited coverage, potentially leaving us uninsured or under insured against some business risks.
As part of risk management, we maintain insurance policies that may provide some insurance cover for labor unrest, mechanical failures, power interruptions, natural calamities or other problems at any of our steelmaking and mining facilities. While we believe that we maintain insurance coverage in amounts consistent with industry norms, our insurance policies do not cover all risks and are subject to exclusions and deductibles.
If our production facility is damaged in whole or in part and our operations are interrupted for a sustained period due to fire and similar perils, there can be no assurance that our insurance policies will be adequate to cover the losses that may be incurred as a result of such interruption or the costs of repairing or replacing the damaged facilities.
Notwithstanding the insurance coverage that we carry, the occurrence of any event that causes losses in excess of limits specified under the policy, or losses arising from events not covered by insurance policies, could have a material adverse effect our business, financial condition and operating results.
36. We are involved in certain outstanding litigation, investigations and other proceedings and cannot assure Investors that we will prevail in these actions.
There are several outstanding litigations against us and our directors. There are also various criminal cases against our Company, our Directors and our subsidiaries. We are a defendant in legal proceedings incidental to our business and operations. These legal proceedings are pending at different levels of adjudication before various courts and tribunals in different jurisdictions. Should the proceedings be decided adversely against us, or any new developments arise, such as a change in Indian law or rulings against us by appellate courts or tribunals, we may incur significant expenses and management time in such legal proceedings and may need to make provisions in its financial statements for such litigation, which could have a material adverse effect on our business, results of operations, financial condition and prospects.
37. Our business is dependent on our continuing relationships with our customers and suppliers who can suspend or cancel delivery of products.
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Events of force majeure such as disruptions of transportation services because of weather-related problems, strikes, epidemics, natural calamities, lock-outs, inadequacies in the road infrastructure and port facilities, government actions or other events that are beyond the control of the parties and allow our suppliers to suspend or cancel deliveries of raw materials could impair our ability to source raw materials and components and to supply our products to customers. Similarly, our customers may suspend or cancel delivery of our products during a period of force majeure and any suspensions or cancellations that are not replaced by deliveries under new contracts or sales to third parties on the spot market would reduce cash flows and could adversely affect our financial condition and results of operations. There can be no assurance that such disruptions will not occur.
38. Our success depends on the continued services of our senior management team.
Our success and growth depend on the continued services of our directors and other members of senior management team. Their extensive experience in the steel industry and in-depth knowledge of various aspects of our business operations. There can be no assurance that any executive director or member of senior management will continue in his or her present position, or that we will be able to find and hire a suitable replacement if any of them retires or joins a competing company. Moreover, along with our steady growth and business expansion, we need to employ, train and retain additional suitable skilled and qualified management and employees from a wider geographical area. If we cannot attract and retain suitable personnel, our business and future growth may be materially and adversely affected.
39. Product liability claims could adversely affect our operations.
We sell products to major manufacturers who are engaged to sell a wide range of end products. Furthermore, our products are also sold to, and used in, certain safety-critical applications. If we were to sell steel that does not meet specifications or the requirements of the application, it could result in significant disruptions to the customer’s production lines. There could also be significant consequential damages resulting from the use of such products. We have a limited amount of product liability insurance coverage, and a major claim for damages related to products sold could leave us uninsured against a portion or all of the award and, as a result, materially harm our financial condition and future operating results.
40. Investors should not rely on any speculative information released in the press or other media regarding us, our business or the Issue.
We are one of the leading steel producers in the world. As a result of this position, there may be information about us, our business and employees or the Issue carried by the press and other media which may be speculative and unconfirmed by us. Prospective investors are cautioned that we do not accept any responsibility for the accuracy or completeness of any such information in the press or other media regarding us, our business and employees or the Issue. Investors should rely only on information included in this Information Memorandum in making an investment decision with respect to this Issue.
Furthermore, speculative information about us, and our directors, officers and key employees could adversely affect our reputation. Such speculation could potentially disrupt our ability to do business with counterparties who give weight to media comment, thereby distracting our management from its responsibilities and adversely affecting the trading price of our securities.
41. We rely on licensing arrangements with our Promoter to use the “Tata” brand. Any improper use of the associated trademarks by the licensor or any other third parties could materially and adversely affect our business, financial condition and results of operations.
Rights to trade names and trademarks are a crucial factor in marketing our products. Establishment of the “Tata” word mark and logo mark in and outside India is material to our operations. We have licensed the use of the “Tata” brand from our Promoter. If our Promoter, or any of its subsidiaries or affiliated entities, or any third party uses the trade name “Tata” in ways that adversely affect such trade name or trademark, our reputation could suffer damage, which in turn could have a material adverse effect on its business, financial condition and results of operations.
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42. We may be unable to realize the anticipated benefits of any acquisition we make under the IBC Process, which could have a material adverse impact on our business, financial condition, reputation and results of operation.
We have completed the acquisition of Tata Steel BSL Limited (formerly known as Bhushan Steel Limited) (“Bhushan Steel”) under IBC, on May 19, 2018.
The valuation of the company depends on and is influenced by the cyclical nature of the global steel industry and may lead us to overvalue the assets we acquire or may be unable to effectively utilize or turnaround the acquired assets. We cannot assure you that any of these acquisitions will actually yield the benefits that may have been envisaged by us at the time of undertaking the same.
We incurred additional debt for the acquisition of Bhushan Steel under IBC. As of December 31, 2019, the Company had total gross borrowings of ₹ 1,09,867 crore on a consolidated basis. We may not be able to secure additional debt in terms favorable to us or at all. Further, additional debt incurred for such an acquisition increased our level of indebtedness substantially and we may be unable to generate sufficient cash to pay the principal of, or interest on, or other amounts due in respect of such indebtedness when they are due.
Our resolution plans are based on certain assumptions and expectation that the acquisition would generate synergies and growth opportunities. However, our assumptions may be incorrect and the acquisition may fail to generate synergies or expected benefits for various reasons. For example, our evaluation of information available as part of the IBC Process may be faulty and as a result, the acquisition may not yield the anticipated benefits. Our analysis of potential benefits of acquisitions may be inaccurate as the assets are situated in a geographic region where we do not operate or are manufacturing products in which we do not have sufficient experience.
Our ability to achieve the benefits we anticipate from our acquisition may depend significantly on whether we are able to integrate our business with that of the acquired entity in an efficient and effective manner. Such integration may involve, among other things, coordination of business development, employee retention, alignment of products, sales and marketing operations. We may also have to rely on the management team of the acquired entity and there can be no assurance that such team will be integrated with our management or remain with the acquired entity.
Our acquisition may also be adversely affected if there are unfavourable changes in government policy or market conditions. Any change in government policy which affects the steel industry directly or indirectly (including due to impact on supply of raw materials or reduction of demand), or significant change in market conditions which affects steel prices in India or globally, may result in our acquisition not achieving the anticipated benefits.
External Risks
43. Our business is substantially affected by prevailing economic, political and other prevailing conditions in India, Europe and the other markets we currently service.
Our Company is incorporated in India, and the majority of our assets and employees are located in India and Europe. As a result, we are highly dependent on prevailing economic conditions in India and Europe and our results of operations are significantly affected by factors influencing the Indian and Eurozone economy. Factors that may adversely affect the Indian and Eurozone economy, and therefore our results of operations, may include:
• any increase in interest rates or inflation; • any exchange rate fluctuation; • any scarcity of credit or other financing in India, resulting in an adverse impact on the economic conditions in India and scarcity of financing of our developments and expansions; • debt crisis in certain European countries; • political instability, a change in government or a change in the economic and deregulation policies; • domestic consumption and savings; • balance of trade movements, namely export demand and movements in key imports (oil and oil products); 26
• annual rainfall in India which affects agricultural production; • any exchange rate fluctuations; • any scarcity of credit or other financing, resulting in scarcity of financing for our expansions; • prevailing economic and income conditions among Indian and European consumers and corporations; • volatility in, and actual or perceived trends in trading activity on, India’s principal stock exchanges; • changes in tax, trade, fiscal or monetary policies, including application of good and services tax (“GST”); • political instability, terrorism or military conflicts in India or in countries in the region or globally; • occurrence of natural or man-made disasters; • infectious disease outbreaks or other serious public health concerns; • prevailing regional or global economic conditions, including in India’s principal export markets; • other significant regulatory or economic developments in or affecting India or its financial services and pharmaceutical sectors; • increase in India’s trade deficits or such trade deficits becoming unmanageable; and • decline or future material decline in India’s foreign exchange reserves.
Any slowdown or perceived slowdown in the Indian economy, or in specific sectors of the Indian economy, could adversely impact our business, results of operations and financial condition and the price of the ordinary shares. Our performance and the growth of our business depend on the performance of the Indian economy and the economies of the regional markets we currently serve. These economies could be adversely affected by various factors, such as political and regulatory changes including adverse changes in liberalization policies, social disturbances, religious or communal tensions, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices and various other factors. Any slowdown in these economies could adversely affect the ability of our customers to afford our services, which in turn would adversely impact our business and financial performance and the price of the ordinary shares.
High rates of inflation in India could increase our costs without proportionately increasing our revenues, and as such decrease our operating margins. Any slowdown or perceived slowdown in the Indian and Eurozone economy, or in specific sectors thereof, could adversely impact our business, results of operations and financial condition and the price of the ordinary shares.
India’s trade relationships with other countries can influence Indian economic conditions. In the year ended March 31, 2019, the trade deficit was approximately 2.1% of GDP. This large trade deficit neutralizes the surpluses in India’s invisibles in the current account, resulting in a current account deficit. If India’s trade deficits increase or become unmanageable, the Indian economy, and therefore our business, future financial performance, cash flows and the trading price of the ordinary shares could be adversely affected.
A decline or future material decline in India’s foreign exchange reserves could impact the valuation of the Rupee and could result in reduced liquidity and higher interest rates which could adversely affect our financial condition and future financial performance.
44. Companies operating in India are subject to a variety of taxes and surcharges.
Tax and other levies imposed by the central and state governments in India that affect our tax liability include income tax and indirect taxes on goods and services such as goods and services tax (“GST”), surcharge and cess currently being collected by the central and state governments, which are introduced on a temporary or permanent basis from time to time. The statutory corporate income tax in India includes a surcharge on the tax and an education cess on the tax and the surcharge resulting in the highest effective tax rate of 34.944%. Recently, the government pursuant to the Taxation Laws (Amendment) Ordinance, 2019 amended the Income Tax Act, 1961 (“Income Tax Act”) to reduce the corporate income tax rate in certain cases. The central or state government may vary the corporate income tax in the future. Any such future increases or amendments may affect the overall tax efficiency of companies operating in India and may result in significant additional taxes becoming payable. Additional tax exposure could materially and adversely affect our business, financial condition and results of 27
operations.
GST has been implemented with effect from July 1, 2017 and has replaced the indirect taxes on goods and services, such as central excise duty, service tax, central sales tax, state value added tax, surcharge and excise, collected by the central and state governments. GST has increased administrative compliance for companies, which is a consequence of increased registration and form filing requirements. As the taxation system is relatively new and could be subject to further amendments in the short term for the purposes of streamlining compliance, the consequential effects on us cannot be determined as of now and there can be no assurance that such effects would not adversely affect our business, future financial performance and the trading price of the Debentures.
45. The taxation system in India could adversely affect our business, financial condition, cash flows and results of operations.
The provisions relating to the GAAR (General Anti Avoidance Rules) were introduced in the Finance Act 2012 and have been applicable since April 1, 2018. The GAAR provisions intend to catch arrangements declared as “impermissible avoidance arrangements”, which is any arrangement, the main purpose or one of the main purposes of which is to obtain a tax benefit and which satisfy at least one of the following tests (a) creates rights, or obligations, which are not normally created between persons dealing at arm’s length; (b) results, directly or indirectly, in misuse, or abuse, of the provisions of the Income Tax Act; (c) lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or (d) is entered into, or carried out, by means, or in a manner, which is not normally employed for bona fide purposes. The tax consequences of the GAAR could result in denial of tax benefits and other consequences, and if the GAAR is made applicable to us, it may have an adverse tax impact on us. Any increases in or amendments in the tax applicable to us due to the GAAR may result in additional taxes becoming payable by us.
46. Changes in the policies of, or changes in, the Indian Government, could adversely affect economic conditions in India, and thereby adversely impact the Group’s results of operations and financial condition.
India remains the Group’s largest market, representing 56% of our revenue in Fiscal 2019. In addition, a significant portion of the Group’s facilities are located in India. Consequently, the Group may be affected by changes to Central Government policies, changes in the Central Government itself, or any other political instability in India. For example, the imposition of foreign exchange controls, rising interest rates, increases in taxation or the creation of new regulations could have a detrimental effect on the Indian economy generally and the Group in particular.
The Central Government has sought to implement a number of economic reforms in recent years, including a review of the national steel policy and the preparation of a five-year strategy paper for the promotion of the steel sector in India, and has also continued the economic liberalization policies pursued by previous Central Governments. However, the roles of the Central Government and the state governments in the Indian economy as producers, consumers and regulators have remained significant. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India generally which may have an adverse effect on the Group’s results of operations and financial condition.
47. The business and activities of the Group, as applicable, may be regulated by the Indian Competition Act, 2002.
The Indian Competition Act seeks to prevent business practices that have a material adverse effect on competition in India. Under the Indian Competition Act, any arrangement, understanding or action in concert between enterprises, whether formal or informal, which causes or is likely to cause a material adverse effect on competition in India is void and attracts substantial monetary penalties.
Any agreement that directly or indirectly determines purchase or sale prices, limits or controls production, shares the market by way of geographical area, market, or number of customers in the market is presumed to have a material adverse effect on competition. Provisions of the Indian Competition Act relating to the regulation of certain acquisitions, mergers or amalgamations which have a material adverse effect on competition and regulations with respect to notification requirements for such combinations came into force on June 1, 2011. The effect of the Indian Competition Act on the business environment in India is unclear and it is difficult to predict 28
its impact on the growth and expansion strategies of the Group. If the Group, as applicable, is affected, directly or indirectly, by the application or interpretation of any provision of the Indian Competition Act, or any enforcement proceedings initiated by the Competition Commission of India (“CCI”), or any adverse publicity that may be generated due to scrutiny or prosecution by the Competition Commission of India, it may have a material adverse effect on its business, prospects, results of operations, cash flows and financial condition.
48. If regional hostilities, terrorist attacks or social unrest in India increase, our businesses could be adversely affected.
India has from time to time experienced instances of civil unrest, terrorist attacks and hostilities with neighboring countries. These hostilities and tensions could lead to political or economic instability in India and have a possible adverse effect on the Indian economy, the Group’s businesses, prospects, results of operations, cash flows and financial condition and future financial performance.
India has also experienced localized social unrest and communal disturbances in some parts of the country. If such tensions become more widespread, leading to overall political and economic instability, it could have an adverse effect on the Group’s business, future financial performance and cash flows.
In addition, certain of our current and planned facilities, including its captive mines, are located in geographically remote areas that may be at risk of terror attacks. For example, attacks by Naxalite rebels in 2009 targeted transportation infrastructure of mining operations in Chhattisgarh. While the Group was not directly affected by these attacks, there can be no assurance that it will not be the target of such attacks in the future. Such attacks may be directed at Group property or personnel, at property belonging to the Group’s customers or at the state- owned infrastructure used by the Group to transport goods to customers. Such attacks, or the threat of such attacks, whether or not successful, may disrupt the Group’s operations and/or delivery of goods, result in increased costs for security and insurance and may adversely impact the Group’s business, results of operations, financial condition and prospects, as well as place the Group’s assets and personnel at risk.
49. If natural disasters occur in India, our results of operations and financial condition could be adversely affected.
India has experienced floods, earthquakes, tsunamis, cyclones and droughts in recent years. Such natural catastrophes could disrupt the Group’s operations, production capabilities or distribution chains or damage its facilities located in India, including its production facilities and mines. While the Group’s facilities were not damaged in the past, a significant portion of its facilities and employees are located in India where they are exposed to such natural disasters.
Additionally, in the event of a drought, the state governments in which the Group’s facilities are located could cut or limit the supply of water to the Group’s facilities, thus adversely affecting the Group’s production capabilities by reducing the volume of products the Group can manufacture and consequently reducing its revenues. In the event of any of the foregoing natural disasters, the ability of the Group to produce and distribute steel may be adversely affected. There can be no assurance that such events will not occur again in the future, or that its business, results of operations, financial condition and prospects will not be adversely affected.
50. Health epidemics and natural calamities in Asia or elsewhere could adversely affect the Indian economy or our business and the price of the ordinary shares.
The outbreak of corona virus across Asia and Europe in 2020, outbreaks of Severe Acute Respiratory Syndrome in Asia in 2003, avian influenza, Ebola virus in western Africa, Zika virus in South America and Influenza A (H1N1) across the world have adversely affected a number of countries and companies. Any increase in the impact of corona virus or any future outbreak of infectious diseases or other serious public health epidemics may have a negative impact on the economies, financial markets and level of business activity in affected areas, which may adversely affect our business. India has also experienced natural calamities such as earthquakes, floods, drought and a tsunami in the recent past. The length and severity of these natural disasters determine the extent of their impact on the Indian economy. Prolonged spells of abnormal rainfall and other natural calamities could have an adverse impact on the Indian economy. Any future outbreak of infectious disease among humans and/or 29
animals or any other serious public health concerns or the occurrence of any natural calamities could materially and adversely affect our business, prospects, financial condition, cash flows and results of operations, and the price of the ordinary shares.
51. Our business requires substantial capital, and any disruption in funding sources would materially and adversely affect our liquidity, financial condition and cash flows.
Our continued business growth, liquidity and profitability are, in large part, dependent upon our timely access to, and the costs associated with, raising capital. Our business depends, and will continue to depend on, our ability to obtain adequate funding on acceptable terms from relatively stable, diversified and low-cost sources of funds. Our ability to borrow funds and refinance existing debt may also be influenced by a variety of factors, including the regulatory environment and policy initiatives in India, developments in the international markets affecting the Indian economy, investors’ and/or lenders’ perceptions and our current and future financial performance, credit ratings, financial condition and relationships with lenders. An event of default, a significant negative ratings action by a rating agency, an adverse action by a regulatory authority or a general deterioration in prevailing economic conditions that constricts the availability of credit may make it difficult for us to access cost effective financing and increase our cost of borrowings.
The global and Indian capital and lending markets are, by nature, highly volatile and access to liquidity can, at times, be significantly reduced. Moreover, towards the end of 2018, defaults in debt repayments by a large NBFC in India, Infrastructure Leasing & Financial Services Limited, which had a significant shareholding from government owned institutions, led to heightened investor focus around the health of the broader NBFC and banking sector as well as their sources of liquidity. This has led to some tightening in liquidity available to certain NBFCs and has also recently resulted in concerns over the financial position and performance of certain banks in India. On March 5, 2020, the RBI seized the board of Yes Bank Limited, and imposed limitations on its operations and a temporary moratorium on withdrawals over ₹50,000 for a period of one month. These events, and if any event of similar nature or magnitude affecting the market sentiment surrounding the sector occurs again in the future, may result in increased borrowing costs and difficulties in accessing cost-effective debt for us. If we are unable to obtain adequate funding from our sources of funds on acceptable terms as and when we require or renew or replace existing financings as they expire, it could limit our growth and profitability and materially and adversely affect our liquidity, financial condition and cash flows.
52. An outbreak of an infectious disease or any other serious public health concerns in Asia or elsewhere could have a material adverse effect on our business, financial condition and results of operations.
The outbreak of an infectious disease in Asia or elsewhere or any other serious public health concern, such as swine influenza, around the world could have a negative impact on economies, financial markets and business activities worldwide and which in turn could have a material adverse effect on our business, financial condition and results of operations. Southeast Asia has been affected by a number of emerging infectious diseases, including those which have a pandemic potential. For example, since December 2019 and as of the date of this Information Memorandum, there is an ongoing outbreak of the 2019 novel coronavirus (COVID-19) which is primarily concentrated in China, but has affected countries globally. In addition, influenza A H5N1 has had a profound effect on the poultry industry and Nipah virus encephalitis, is an emerging infectious disease of public health importance in the Southeast Asia region. India’s southern state of Kerala was put under a lot of stress in May 2018 due to an outbreak of the Nipah virus. Southeast Asia is home to dynamic systems in which biological, social, ecological, and technological processes interconnect in ways that enable microbes to exploit new ecological niches. These processes include population growth and movement, urbanisation, changes in food production, agriculture and land use, water and sanitation, and the effect of health systems through generations of drug resistance. We can give no assurance that the above or a future outbreak of an infectious disease among humans or animals (if any) or any other serious public health concern will not have a material adverse effect on our business, financial condition and results of operations.
53. The Group’s ability to raise foreign capital may be constrained by Indian law
As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit our financing sources and hence could constrain our ability to obtain financing on 30
competitive terms and refinance existing indebtedness. In addition, there can be no assurance that the required approvals will be granted to us without onerous conditions, it on favourable terms or at all. Limitations on raising foreign debt may have an adverse effect on our business growth, financial condition and results of operations.
54. The RBI’s Large Exposures Framework may restrict our ability to raise funds from banks.
The RBI, by way of its large exposure framework circular dated December 1, 2016, as amended, which is effective from April 1, 2019 (the “Large Exposure Framework”), has capped the exposure limits for a bank towards a group of connected counterparties. The RBI has directed that the sum of all the exposure values of a bank to a group of connected counterparties must at all times not be higher than 25% of the bank’s available eligible capital base. The Large Exposure Framework defines “connected counterparties” as a group of counterparties with specific relationships or dependencies such that, were one of the counterparties to fail, all of the counterparties would very likely fail. For the purpose of the Large Exposure Framework, such a group of connected counterparties must be treated as a single counterparty. Accordingly, in such cases, the sum of the bank’s exposures to all the individual entities included within a group of connected counterparties is subject to the large exposure limit and to the other regulatory requirements set out in the Large Exposure Framework.
If banks adopt a strict interpretation of the Large Exposure Framework and calculate their exposure to all Tata group entities for the purpose of the 25% exposure limits, our ability to raise funds from such banks might be affected. If we are unable to raise funds from banks to meet our working capital and other requirements, we may have to meet our funding requirements by issuing debt securities such as non-convertible debentures and/or U.S.$ denominated bonds. This might result in increased interest expenses and financing costs, which may materially and adversely affect our cash flow, business, financial condition and results of operations.
55. Any downgrade of India’s sovereign debt rating by an international rating agency could have a negative impact on the Group’s results of operations and financial condition.
Recently International rating agency, Moody’s has lowered outlook on India to “Negative” from “Stable”. Any downgrade by international rating agencies of the credit rating for Indian domestic and international debt may adversely impact the Group’s ability to raise additional financing and the interest rates and commercial terms on which such additional financing is available. This could have an adverse effect on the Group’s ability to obtain financing to fund its growth on favourable terms or at all and, as a result, could have a material adverse effect on its business, results of operations, financial condition and prospects.
56. A third party could be prevented from acquiring control of us because of anti-takeover provisions under Indian law.
There are provisions in Indian law that may delay, deter or prevent a future takeover or change in control of our Company. Under the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 an acquirer has been defined as any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights or control over a company, whether individually or acting in concert with others. Although these provisions have been formulated to ensure that interests of investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control of our Company. Consequently, even if a potential takeover of our Company would result in the purchase of the Ordinary Shares at a premium to their market price or would otherwise be beneficial to our Shareholders, such a takeover may not be attempted or consummated because of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011.
57. We may be required to change our statutory auditors, Price Waterhouse & Co Chartered Accountants LLP pursuant to the order dated January 10, 2018 issued by SEBI.
Price Waterhouse and Co Chartered Accountants LLP (“Price Waterhouse & Co”) are the current Statutory Auditors of our Company, appointed at the annual general meeting of our Company held on August 8, 2017, for a period of five years from August 8, 2017 till the date of the annual general meeting of our Company to be held in the year 2022. Our Statutory Auditors form part of the Price Waterhouse network of firms in India (“PW Network”).
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SEBI by its order dated January 10, 2018, in connection with the involvement of one of the other PW Network firms as auditors in the audit of Satyam Computer Services Limited (“SEBI Order”), among other things, (i) prohibited entities/firms practicing as chartered accountants in India under the brand and banner of Price Waterhouse from directly or indirectly issuing any certificate of audit of listed companies, compliance of obligations of listed companies and intermediaries registered with the SEBI under certain laws including the SEBI Act and the Companies Act for two years; and (ii) prohibited listed companies and intermediaries registered with SEBI from engaging any audit firm forming a part of the Price Waterhouse network (“PW Network”) for issuing any certificate with respect to compliance of statutory obligations which the SEBI is competent to administer and enforce for various laws for two years. The PW Network has filed an appeal against the SEBI Order on January 17, 2018 before the Securities Appellate Tribunal. The Securities Appellate Tribunal (“SAT”) granted partial relief to Price Waterhouse (PW), allowing it to audit existing clients till March 31, 2019. Thereafter, the Supreme Court has provided an interim stay on the SAT order, particularly in connection with the paragraph of the SAT order which stated that SEBI did not have the power to ban an auditor. Accordingly, while the ban does not currently impact the ability of Price Waterhouse & Co to continue as statutory auditors of our Company and our Group for Fiscal 2020, we cannot be certain that Price Waterhouse & Co will be able to continue as our statutory auditors in the future.
If we change our statutory auditors, such change may require, among other things, the approval of the shareholders through a special resolution. We cannot assure you that we will be able to change our Statutory Auditors, if required to do so, in a timely manner and a sudden change in the Statutory Auditors may be disruptive to our business and divert management attention.
58. Investors may have difficulty enforcing judgments against our Company and its Indian subsidiaries or their respective management in the Indian courts.
We are a public limited company incorporated under the laws of India. Substantially all of our directors and executive officers are residents of India and a substantial portion of our assets and such persons are located in India. As a result, it may not be possible for investors to effect service of process upon us or such persons outside of India, or to enforce judgments obtained against such parties outside of India.
Recognition and enforcement of foreign judgments is provided for under Section 13 of Civil Procedure Code, 1908, (“CPC”) on a statutory basis. Section 13 of the CPC provides that foreign judgments shall be conclusive regarding any matter directly adjudicated upon, except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognise the law of India in cases to which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; and (vi) where the judgment sustains a claim founded on a breach of any law then in force in India. Under the CPC, a court in India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record. Such presumption may be displaced by proving that the court did not have jurisdiction.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Section 44A of the CPC provides that where a foreign judgment has been rendered by a superior court, within the meaning of that Section, in any country or territory outside of India which the Indian central government has by notification declared to be in a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the CPC is applicable only to monetary decrees, which are dissimilar to amounts payable in respect of taxes, other charges of a like nature, a fine or other penalties.
Generally, there are considerable delays in the disposal of suits by Indian courts. It is unlikely that a court in India would award damages on the same basis as a foreign court would, if an action was brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if that court were of the view that the amount of damages awarded was excessive or inconsistent with public policy or Indian practice. It is uncertain as to whether an Indian court would enforce foreign judgments that would contravene or violate Indian law. However, a party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI under the 32
Foreign Exchange Management Act, 1999, to execute such a judgment or to repatriate any amount recovered.
59. A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian economy, which could adversely affect our financial condition.
India’s foreign exchange reserves totaled approximately US$ 407 billion as of March 31, 2019. Declines in foreign exchange reserves could adversely affect the valuation of the Rupee and could result in reduced liquidity and higher interest rates that could adversely affect our future financial condition and the market price of the Ordinary Shares.
Risks Related to the markets
60. A prolonged slowdown in economic growth in India or financial instability in other countries could cause the Company’s business to suffer.
The growth rate of India’s GDP, which, according to the International Monetary Fund, was above 9.0% in the year ended March 31, 2008, moderated to 8.6% in the year ended March 31, 2010 and was approximately 8.9%, 6.7%, 4.5%, 4.9%, 7.3%, 7.5%, 6.8%, 7.3% and around 5.6% in the years ended March 31, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019 respectively. Notwithstanding the RBI’s policy initiatives, the course of market interest rates continues to be uncertain due to the high inflation, the increase in the fiscal deficit and the Government borrowing program. Any increase in inflation in the future, because of increases in prices of commodities such as crude oil or otherwise, may result in a tightening of monetary policy. The uncertainty regarding liquidity and interest rates and any increase in interest rates or reduction in liquidity could materially and adversely impact the Company’s business.
In addition, the Indian market and the Indian economy are influenced by economic and market conditions in other countries, particularly those of emerging market countries in Asia. Investors’ reactions to developments in one country may have adverse effects on the economies of other countries, including the Indian economy. A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility in the Indian financial markets and, indirectly, in the Indian economy in general. Any worldwide financial instability could influence the Indian economy and could have a material adverse effect on the Company’s business, financial condition and results of operations.
61. Volatility in India’s financial markets could materially and adversely affect the Company’s financial condition.
Stock exchanges have, in the past, experienced substantial fluctuations in the prices of listed securities. The Indian economy and financial markets are significantly influenced by worldwide economic, financial and market conditions. As the Company has significant operations in India and accesses the Indian markets for debt financing, this uncertainty and volatility in the Indian financial markets could have a material and adverse effect on the Company’s financial condition.
62. Political changes in India could delay and/or affect the further liberalisation of the Indian economy and materially and adversely affect economic conditions in India generally and the Company's business in particular.
The Company's business could be significantly influenced by economic policies adopted by the Government of India. Since 1991, successive governments have pursued policies of economic liberalisation and financial sector reforms. The Government of India has at various times announced its general intention to continue India's current economic and financial liberalisation and deregulation policies. However, protests against such policies, which have occurred in the past could slow the pace of liberalisation and deregulation. The rate of economic liberalisation could change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment in India could change as well. While the Company expects the government to continue the liberalisation of India's economic and financial sectors and deregulation policies, there can be no assurance that such policies will be continued.
63. Changes in the policies of, or changes in, the Indian Government, could adversely affect economic conditions 33
in India, and thereby adversely impact the Company’s results of operations and financial condition.
India remains the Company’s largest market, representing 56% and 48% of the Company’s net sales in the year ended March 31, 2019 and March 31, 2018 In addition, a major portion of the Company’s facilities are located in India. Consequently, the Company may be affected by changes to Central Government policies, changes in the Central Government itself, or any other political instability in India. For example, the imposition of foreign exchange controls, rising interest rates, increases in taxation or the creation of new regulations could have a detrimental effect on the Indian economy generally and the Company in particular.
The Central Government has sought to implement a number of economic reforms in recent years and has also the economic liberalization policies pursued by previous Central Governments. However, the roles of the Central Government and the state governments in the Indian economy as producers, consumers and regulators have remained significant. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India generally which may have an adverse effect on the Company’s results of operations and financial condition.
Since our business is subject to a significant number of tax regimes and changes in legislation governing the rules implementing them or the regulator enforcing them in any one of those jurisdictions could negatively and adversely affect our results of operations.
The revenues recorded and income earned is taxed on differing bases, including net income actually earned, net income deemed earned and revenue-based tax withholding. The final determination of the tax liabilities involves the interpretation of local tax laws as well as the significant use of estimates and assumptions regarding the scope of future operations and results achieved and the timing and nature of income earned and expenditures incurred. Changes in the operating environment, including changes in tax laws, could impact the determination of the tax liabilities of our Company for any year.
64. Compliance with new or changing corporate governance and public disclosure requirements adds uncertainty to the Company's compliance policies and increases compliance costs
The Company is subject to a complex and changing regime of laws, rules, regulations and standards relating to accounting, corporate governance and public disclosure, applicable SEBI regulations, stock market listing regulations, new or changed laws, rules, regulations and standards may lack specificity and are subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. The Company's management and other personnel may be required to devote a substantial amount of time to such compliance initiatives. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards. The Company is committed to maintaining high standards of corporate governance and public disclosure. However, efforts to comply with evolving laws, rules, regulations and standards in this regard have resulted in. and are likely to continue to result in increased general and administrative expenses and a diversion of management resources and time.
A majority of the provisions and rules under the Companies Act, 2013 have been notified and have come into effect from the date of their respective notification, resulting in the corresponding provisions of the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect significant changes to the Indian company law framework, such as in the provisions related to issue of capital (including provisions in relation to issue of securities on a private placement basis), disclosures in offering documents, corporate governance norms, accounting policies, internal financial control, and audit matters and related party transactions. The Company is also required to spend, in each financial year, at least 2.0% of its average net profits during the three immediately preceding financial years towards corporate social responsibility activities. Further, the Companies Act, 2013 imposes greater monetary and other liabilities on the Company, its directors and Key Managerial personnel (“KMP”) for any non-compliance of its terms. To ensure compliance with the requirements of the Companies Act, 2013, the Company may need to allocate additional resources, which may increase the Company’s regulatory compliance costs and divert management attention.
The Company may face challenges in interpreting and complying with such provisions due to limited 34
jurisprudence on them. In the event the Company's interpretation of the Companies Act, 2013 differs from, or contradicts with, any judicial pronouncements or clarifications issued by the Government in the future, the Company may face regulatory actions or be required to undertake remedial steps. Additionally some of the provisions of the Companies Act, 2013 overlap with other existing laws and regulations (such as corporate governance norms and insider trading regulations issued by SEBI). Recently, the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) applicable to all Indian companies with listed securities or desirous of listing its securities, on an Indian Stock Exchange, effective December 1, 2015. Pursuant to Regulation 10 the Listing Regulations, the Company is required to, among other things, ensure that there is at least one woman director on the Company Board of Directors at all times, establish a vigilance mechanism for directors and employees and reconstitute certain committees in accordance with the revised guidelines. The Company may face difficulties in complying with any such overlapping requirements. Further, any such increase in the Company’s compliance requirements or compliance costs may have an adverse effect on our business and results of operations.
65. The Company may be materially and adversely affected by RBI policies and actions.
Recently RBI announced series of interest rate cuts coupled with statements on inflation which may have impacted the price of the Company's securities. The Company can make no assurances about future market reactions to RBI announcements and their impact on the price of its securities. Furthermore, the Company's business could be significantly impacted should the RBI make major alterations to monetary or financial policy. Certain changes, such as the raising of interest rates, could negatively affect the Company's finance cost and in turn operations, any of which could have a material adverse effect on the Company's financial condition..
66. Taxation
Potential purchasers and sellers of the Debentures should be aware that they may be required to pay stamp duties or other documentary charges/taxes in accordance with the laws and practices of India. Payment and/ or delivery of any amount due in respect of the Debentures will be conditional upon the payment of all applicable taxes, duties and/or expenses.
Potential Investors, who are in any doubt as to their tax position should consult their own independent tax advisers. In addition, potential Investors should be aware that tax regulations and their application by the relevant taxation authorities change from time to time. Accordingly, it is not possible to predict the precise tax treatment which will apply at any given time.
67. The Debentures may be Illiquid
It is not possible to predict if and to what extent a secondary market may develop in the Debentures or at what price the Debentures will trade in the secondary market or whether such market will be liquid or illiquid. If so specified in this Information Memorandum, application has been made to list or quote or admit to trading the Debentures on the stock exchange or quotation system(s) specified. If the Debentures are so listed or quoted or admitted to trading, no assurance is given that any such listing or quotation or admission to trading will lead to greater liquidity than if they were not so listed or quoted or admitted to trading. The listing of the Debentures is subject to receipt of the final listing and trading approval from the Stock Exchange.
The Issuer may, but is not obliged to, at any time purchase the Debentures at any price in the open market or by tender or private agreement. Any Debentures so purchased may be resold or surrendered for cancellation. The more limited the secondary market is, the more difficult it may be for holders of the Debentures to realize value for the Debentures prior to redemption of the Debentures.
68. Downgrade in credit rating
The Debentures are rated as “Ind AA” by India Ratings and Research Private Limited (India Ratings) and “CARE AA; Stable” by Credit Analysis & Research Limited (CARE Ratings) for the issuance of an aggregate amount of Rs. 685 crores. The Issuer cannot guarantee that these rating will not be downgraded. Such a downgrade in any of the credit ratings may lower the value of the Debentures. 35
69. Future legal and regulatory obstructions
Future government policies and changes in laws and regulations in India and comments, statements or policy changes by any regulator, including but not limited to SEBI or RBI, may adversely affect the Debentures. The timing and content of any new law or regulation is not within the Issuer’s control and such new law, regulation, comment, statement or policy change could have an adverse effect on market for and the price of the Debentures.
Further, the RBI or other regulatory authorities may require clarifications on this Information Memorandum, which may cause a delay in the issuance of Debentures or may result in the Debentures being materially affected or even rejected.
70. Early Termination for Extraordinary Reasons, Illegality and Force Majeure
If the Issuer determines that, for reasons beyond its control, the performance of its obligations under the Debentures has become illegal or impractical in whole or in part for any reason, the Issuer may, at its discretion and without obligation, redeem the Debentures prior to maturity.
71. The Company is exposed to operational risks, including risks in connection with the Company's use of information technology.
Operational risk is the risk of loss resulting from inadequate or failed internal systems and processes, from either internal or external events. Such risks could stem from inadequacy or failures of controls within internal procedures. violations of internal policies by employees, disruptions or malfunctioning of information technology systems such as computer networks and telecommunication systems, other mechanical or equipment failures, human error, natural disasters or malicious acts by third parties. Any unauthorised access to or misuse of data on the Company's information technology systems, human errors or technological or process failures of any kind could severely disrupt the Company's operations, including its manufacturing, design and engineering processes, and could have a material adverse effect on the Company financial condition and results of operations.
72. The Company may be materially and adversely affected by the divulgence of confidential information.
Although the Company has implemented policies and procedures to protect confidential information such as key contractual provisions, future projects, and customer records, such information may be divulged including as a result of hacking or other threats from cyberspace. If this occurs, the Company could be subject to claims by affected parties, negative publicity and loss of proprietary information, all of which could have an adverse and material impact on the Company's business, financial conditions, results of operations and cash flows.
73. Any failures or weaknesses in the Company's internal controls could materially and adversely affect the Company financial condition and results of operation.
Although the Company continually review and evaluate its internal control systems to allow management to report on the sufficiency of the Company's internal controls, the Company cannot assure that it will not discover additional weaknesses in the Company internal controls over financial reporting. Any such additional weaknesses or failure to adequately remediate any existing weakness could materially and adversely affect the Company's financial condition or results of operations and the Company's ability to accurately report its financial condition and results of operations in a timely and reliable manner.
74. The Company may be materially and adversely impacted by political instability, wars, terrorism, multinational conflicts, natural disasters, epidemics and labour strikes.
The Company's products are used in India and also exported to a number of geographical markets. Consequently, the Company's operations in these foreign markets may be subject to political instability, wars, terrorism, regional or multinational conflicts, natural disasters, fuel shortages, epidemics and labour strikes. In addition, conducting business in India and internationally, especially in emerging markets, exposes the Company to additional risks, including adverse changes in economic and government policies, unpredictable shifts in regulation, inconsistent 36
application of existing laws, rules and regulations, unclear regulatory and taxation systems and divergent commercial and employment practices and procedures. Any significant or prolonged disruption or delay in the Company's operations related to these risks could material and adversely affect its business, financial condition and results of operations.
75. India’s obligations under the World Trade Organization Agreement could materially affect the Company's business
India's obligations under its World Trade Organization agreement could reduce the present level of tariffs on imports of steel and related products. Reductions of import tariffs could result in increased competition which, in turn, could materially and adversely affect the Company's business, financial condition and results of Operations.
76. The Company's business could be negatively affected by the actions of activist shareholders.
Certain of the Company's shareholders may, from time to time, advance shareholder proposals or otherwise attempt to effect changes or acquire control over the Company's business. Campaigns by shareholders to erred changes at publicly listed companies are sometimes led by investors seeking to increase short-term shareholder value by advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases or even sales of assets or the entire company, or by voting against proposals put forward by the Board of Directors and management of the company. If faced with actions by activist shareholders, the Company may not be able to respond effectively to such actions, which could be disruptive to the Company's business.
77. Debentures may not be a suitable investment for all investors.
Each prospective investor in the Debentures must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
• have sufficient knowledge and experience to make a meaningful evaluation of the relevant Debentures, the merits and risks of investing in the relevant Debentures and the information contained or incorporated by reference in this Information Memorandum or any applicable supplement; • have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the relevant Debentures and the impact such investment will have on its overall investment portfolio; • have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Debentures, including where principal or interest is payable in one or more currencies, or where the currency for principal or interest payments is different from the potential investor’s currency; • understand thoroughly the terms of the relevant Debentures and be familiar with the behavior of any relevant indices and financial markets; and • be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.
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REGULATORY DISCLOSURES
1) ISSUER INFORMATION
(a) About the Issuer
Name Tata Steel Limited CIN L27100MH1907PLC000260 Registered office Bombay House, 24 Homi Mody Street, Fort, Mumbai 400001, India Corporate Office Bombay House, 24 Homi Mody Street, Fort, Mumbai 400001, India Mr. Parvatheesam K Company Secretary & Chief Legal Officer (Corporate & Compliance) Tata Steel Limited Company Secretary and Bombay House, 24, Homi Mody Street Compliance Officer Fort, Mumbai 400 001 Tel : (91 22) 66658282 Fax: (91 22) 66657724 E-mail: [email protected] Mr. Koushik Chatterjee Executive Director & Chief Financial Officer Chief Financial Officer Tata Steel Limited Bombay House, 24, Homi Mody Street Fort, Mumbai 400 001 IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400 001 Debenture Trustee Tel No.: +91 22 4080 7000 Fax No.: + 91 22 6631 1776 Email: [email protected] Contact Person: Mr. Subrat Udgata, Vice President TSR Darashaw Limited 6-10, Haji Moosa Patrawala Industrial Estate 20, Dr. E. Moses Road, Mahalaxmi Registrars and Transfer Mumbai 400 011, India Agents Tel No.: +91 22 6656 8484 Fax No.: + 91 22 6656 8494 Email: [email protected] Contact Person: Ms.Vidya Brahme, Chief Manager Credit Rating Agency/ies India Ratings and Research Private Limited (India Ratings) for the Debentures Credit Analysis & Research Limited (CARE Ratings) Price Waterhouse & Co. Chartered Accountants LLP 56 & 57, Block DN, Ground Floor, A Wing, Sector V, Salt Lake, Kolkata Auditors of the Issuer 700091, West Bengal Tel No.: +91 22 6669 1500 Fax No.: + 91 22 6654 7804
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(b) Brief summary of Business/Activities of the Issuer and its line of Business
i. Overview
Tata Steel Group is one of the world’s largest steel companies with a steel production capacity of approximately ~33 MTPA. It is one of the world's most geographically-diversified steel producers, with operations and commercial presence across the world. The group (excluding SEA operations) recorded a consolidated turnover of US $22.67 billion in the financial year ending March 31, 2019. As of March 31, 2019, our Group had more than 65,000 employees.
Our Company was established as India’s first integrated steel company in 1907 by Jamsetji N. Tata and is one of the flagship companies of the Tata Group. Our Group has a presence across the entire value chain of steel manufacturing, including producing and distributing finished products as well as mining and processing iron ore and coal for our steel production. Our Group’s operations are primarily focused in India, Europe and South East Asia. For Fiscal 2019, India and Europe represented approximately 56% and 41%, respectively, of the revenue of our Group.
The steel production capacity of our Group has increased from approximately 5.0 MTPA in Fiscal 2006 to approximately 33 MTPA in Fiscal 2019. As of March 31, 2019, the steel production capacity of our Group in India is located in Jamshedpur and Kalinganagar, where our Group has two facilities with a total steel production capacity of 13 MTPA and a variety of finishing plants. The operations of our Group in India also include captive iron ore and coal mines. Our Group has significant operations in the United Kingdom and the Netherlands, where our Group has a total steel production capacity of approximately 12.4 MTPA. The remaining steel production capacity of our Group is located in South East Asia.
In Fiscal 2019, our Group recorded sales in India of 12.69 MT, recording a growth of 4.4% over Fiscal 2018. The increase was largely due to the ramping up of operations at the Kalinganagar plant in Odisha, which is now operating at full capacity.
Our Group offers a broad range of steel products including a portfolio of high value-added downstream products such as hot rolled, cold rolled and coated steel, sections, plates, rebars, wire rods, tubes, rails and wires. Our Group is also a large producer of ferro-chrome in India.
The main markets for our products are India and Europe, which together accounted for more than 95% of our total volumes in Fiscal year 2019, respectively, and the remaining from sales primarily taking place in other markets in Asia. Our customers are primarily in the construction, infrastructure, automotive, consumer goods, material handling, aerospace and general engineering industries.
For Fiscals 2019 and 2018, our Group recorded revenue of ₹1,57,669 crores and ₹1,24,110 crores, respectively. For the same period, our Group recorded a PAT of ₹9,098 crore and profit of ₹17,763 crore respectively. We had total assets of ₹2,33,582 crore as of March 31, 2019 and ₹2,09,758 crore as of 31 March 2018, our total saleable steel production was 26.80 MT for Fiscals 2019 and 22.92 MT for fiscal 2018.
Facilities
TSL have significant operations in Jamshedpur, where we operate a 10 MTPA steel production plant and a variety of finishing plants. Recently, we added a new 3 MTPA facility in Kalinganagar and increased the crude steel production capacity in India to 13 MTPA. Our steel production facilities primarily comprise coke ovens, sinter and pellet plants, furnaces, converters, casters, rolling facilities and downstream facilities and also include support facilities such as captive power plants, power stations, boiler houses, repair and maintenance workshops, research, development and testing laboratories and harbours.
Pursuant to the Insolvency and Bankruptcy Code, 2016 (‘IBC’), the Company had acquired 72.65% equity stake in BSL through its wholly-owned subsidiary company, Bamnipal Steel Limited, for an 39 aggregate amount of ₹158.89 crore. The acquisition was completed in May 2018 at the total consideration of Rs. 35,200 crore. Tata Steel through its subsidiary Tata Sponge Limited (Erstwhile Tata Steel Sponge Iron Limited TSIL) has taken over Usha Martin – Steel Business unit on April 9, 2019, which is an Integrated Steel Plant to manufacture alloyed speciality steel in long products segments like Wire Rods and Bars.
TSL conducts our European operations with a steel production capacity of 12.4 MTPA through our wholly owned subsidiary TSE and our operations in India are primarily conducted directly by our Company. The remaining steel production capacity of 2.2 MTPA is located in South East Asia, with finishing capacity spread across South East Asia.
During Fiscal year 2018, company announced the expansion of Kalinganagar Plant capacity by 5 MTPA. Tata Steel Kalinganagar Phase II expansion project is underway. The 2.2 mn tons CRM complex and pellet plant has been prioritized to improve product mix and reduce cost.
A brief history of the Issuer
The Company was originally incorporated as ‘The Tata Iron and Steel Company Limited’ on August 26, 1907 as a public limited company, under the provisions of the Indian Companies Act, 1882. The Company was established by Jamsetji N. Tata, the founder of the Tata Group and today is one of the flagship companies of the Tata Group. Pursuant to a resolution of the Board of Directors dated May 19, 2005 and of the shareholders of the Company dated July 27, 2005, the name of the Company was changed to ‘Tata Steel Limited’ with effect from August 12, 2005. The registered office of Tata Steel is situated at Bombay House, 24 Homi Mody Street, Fort, Mumbai 400 001, Maharashtra, India.
The Company manufactures a diversified portfolio of steel products, with a product range that includes flat products and long products, as well as some non-steel products such as ferro alloys and minerals, tubes and bearings. The Company, through its Indian operations, is one of the leading manufacturers of ferro chrome and steel wires in India and a leading producer of chrome ore internationally. The Company’s main markets include the Indian construction, automotive and general engineering industries.
The Company’s main facilities have been historically concentrated around the Indian city of Jamshedpur (Jharkhand) and Kalinganagar (Odisha), where the Company operates at 13.0 mtpa (crude steel) capacity including a variety of finishing plants. The Company’s bearing division is located at Kharagpur (West Bengal), ferro manganese plant at Joda (Orissa), charge chrome plant at Bamnipal (Orissa), cold rolling complex at Tarapur (Maharashtra) and wire division at Tarapur (Maharashtra) and Indore (Madhya Pradesh). The Company also has iron ore and coal mines, collieries and quarries are in the States of Jharkhand and Orissa.
In February 2005, the Company acquired the steel-related businesses of NatSteel Asia, with facilities located in Singapore, China, Malaysia, Vietnam, the Philippines, Thailand and Australia. In March 2006 the Company also acquired a 25.0% interest in Millennium Steel, the largest steel producer in Thailand, and in April 2006 a further 42.1% interest, for a total interest of 67.1% in Millenium Steel, (now known as Tata Steel (Thailand) Public Company Limited). On April 2, 2007 the Company acquired Corus Group Limited, with key production facilities located in the United Kingdom and the Netherlands. The acquisition was implemented by Tata Steel UK Holdings Limited which is a wholly owned subsidiary of Tata Steel Europe Limited, formerly known as Tulip UK Holdings (No. 1) Limited. In April 2009, Hoogly Metcoke & Power Company Limited, which was earlier a subsidiary of the Company was merged with the Company. Further in April 2011, Centennial Steel Company Limited and in April 2014, Kalimati Investment Company Limited also got amalgamated with the Company.
In May 2018 company had acquired Bhushan Steel Limited through its subsidiary, Bamnipal Steel Limited which is having a capacity of 5.6 MTPA through the IBC proceedings.
In April 2019, Tata Steel through Tata Steel Long products Limited acquired Usha Martin – Steel Business unit, which is an Integrated Steel Plant to manufacture alloyed specialty steel in long products 40 segments like Wire Rods and Bars. Post-acquisition of business, Tata Steel Long products made a rights issue, subscribed to 2,58,43,967 Rights Equity Shares of Tata Sponge Iron Limited at an issue price of Rs. 500 per Rights Equity Share) aggregating to Rs. 1,292.20 crores.
The equity shares of the Company were first listed on the Bombay Stock Exchange (BSE) in 1937 as per records available with the Company and previously were also listed with the Native Share and Stock Brokers’ Association Limited (the predecessor of the BSE). The Company’s equity shares were listed on the National Stock Exchange of India Limited (NSE) on November 18, 1998. The Global Depository Receipts issued by the Company are listed on the Luxembourg Stock Exchange and the London Stock Exchange.
Dividend History of the Company
The Company has been a dividend paying company and has paid dividends on its ordinary shares.
Ordinary Shares
The following are the dividend pay outs in relation to the Ordinary Shares in the last five fiscal years by the Company:
Dividend per Equity Amount Fiscal Share of Rs.10 each (In Rs. million) (Amount in Rs.) 2014 10 10,374 2015 8 9,263 2016 8 9,247 2017 10 11,689 2018 10 13,815 2019 13 17,959
Milestones achieved by the Issuer since incorporation are mentioned below:
Year Event 1910 Tata Steel Limited obtains its first colliery. a) First ingot rolls out on February 16 1912 b) Bar mills commence operations c) Introduction of 8 hour working day 1915 Introduction of free medical aid a) Introduction of joint consultation with respect to various aspects of employee— management relationship. 1920 b) Introduction of various initiatives before the same were promulgated as law: including leave with pay, workers’ provident fund schemes, and workmen’s’ accident compensation scheme. 1921 Inauguration of the Jamshedpur Technical Institute. 1928 Introduction of maternity benefits before the same was promulgated as law. 1934 Introduction of profit sharing bonus before the same was promulgated as law. 1937 Introduction retiring gratuity schemes before the same was promulgated as law. 41
Year Event Introduction of electric process for making steel which was employed for 1938 production of high grade iron and steel casting. 2 million tonne expansion programme carried out under contract with Kaiser 1955-1958 Engineers USA. 1972-1973 Coal fine washeries were set up for the first time in Jamadoba and West Bokaro Modernization program of the Jamshedpur steel works was initiated in four phases 1980-1996 during this period. a) Cold rolling mill set up at Jamshedpur. The mill was completed in a record time of 26 months. 2000 b) Creation of B2B portal called metaljunction.com in collaboration with SAIL and Kalyani Steel. 2001 World Steel Dynamics ranks Tata Steel as ‘India’s only World-class steel maker’ a) The Company launches its first branded cold rolled steel product called ‘Tata Steelium’ b) Gomardih dolomite quarry of the Company’s Mines Division achieves a record of being an accident free mine for the longest duration. The mine recorded a 2003 period of 7.20 million accident free man hours from August 9, 1992 to August 9, 2003. c) The Company launches a programme called ‘Aspire’ which seeks to incorporate the best practices of various improvement initiatives. d) The Company celebrates 75 years of industrial harmony. a) The Company’s biggest blast furnace completes production of 14 million tons of hot metal which is the highest production achieved by a blast furnace in India in its first campaign. 2004 b) The Company files a corporate sustainability report where the Company was rated as India’s ‘Top Reporter’ by United Nations Environment Program and Standard and Poor’s. a) The Company acquires NatSteel Asia in Singapore. b) The Company launches ‘Steel Junction’ which is India’s first organized retail 2005 store for steel products. c) The company is ranked as the ‘World’s Best Steel Maker’ by World Steel Dynamics a) The Company’s steel works at Jamshedpur crosses 5 million tonne mark in crude steel production. b) The Company is ranked again as the ‘World’s Best Steel Maker’ by World Steel Dynamics 2006-2007 c) The Company acquires Corus, which makes the Company the sixth largest steel maker in terms of actual crude steel production. d) The Company was conferred the Prime Minister of India’s Trophy for the ‘Best Integrated Steel Plant’ a) The Company acquires Corus Group Plcon April 2, 2007 2007-2008 b) India’s largest Blast Furnace, the H Blast Furnace at Tata Steel, blown in on 2008-2009 May 31, 2008. c) 1.8mtpa capacity expansion comes on-stream in May 2008 2009-2010 a) Issued GDRs worth US$ 500 Mn at US$ 7.644/share in July’09
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Year Event b) The Company was awarded the CSR Excellence award 2010 by the Associated Chambers of commerce and Industry c) The Company was awarded FE-EVI Green Business Leadership Award in the iron and steel category d) The Company was awarded ‘Asia’s Best Employer Brand Awards, 2010’ for talent management, best human resource strategy in line with business, excellence in training, CEO with human resource orientation and human resource leadership. e) The Company was awarded the Rashtriya Khel Protsahan Puruskar award for outstanding contribution in the field of sports in the category of ‘Financial Support for sports Excellence’. Issued 57 million Equity shares of face value Rs.10/- each at a premium of Rs.600 2010-2011 each through Follow-on Public Offer. a) Work in progression for 6 MTPA greenfield capacity expansion at Kalinganagar, Odisha 2011-2012 b) Conducts Ground Breaking ceremony for the CAPL Project c) Hundred years of iron making and steel making at Tata Steel d) Tata soars into the top most Valuable Global Brands. a) Bags Prime Minister’s Trophy for the seventh time 2012-2013 b) The Deming Grand Prize a) 2014- Coke Oven Battery#11 commissioned 2013-2014 b) Inauguration of JCAPCPL, India's first Continuous Annealing & Processing Line a) Golden Peacock National Training Award 2014 b) BML Munjal Award 2014 for Business Excellence through Learning and Development c) Best Establishment Award 2014 during the 26th CII National Work-skill Competition 2014-2015 d) Best ever performance by winning 41 prizes, out of a total of 58, in 27th CII Eastern Region Work-skills Competition 2015 e) Assocham Skilling India Award under ‘Best Private Organisation-Training Programme’ f) 1st prize in the AIMA’s National HR Summit-2014 for the case study on Enterprise Capability Building System (ECBS) a) ‘IspatSurakshaPuraskar’ 2015 under No Fatal Accident Category, received by the Jamshedpur Works - Coal, Coke & Chemical, Bl. Furnaces, & Agglomerate, Rolling Mills; ‘IspatSurakshaPusaskar’ 2015 for No Fatal Accident category in contract labour received by the Mines & Collieries Division and National Safety Council Safety Award received by the Wire division. 2015-2016 b) Golden Peacock Innovative Product/Service Award, 2015 c) Golden Peacock Award for Risk Management’ for the year 2015. d) ‘Best Companies to Work for’ 2016 award in the core sector by Business Today e) Global Industry Leader Award in the Dow Jones Sustainability Index 2016 f) Sustainable Manufacturing Award at Make in India Awards 2016 a) Entered into definitive agreements to acquire: Majority stake in the port 2016-2017 company for the proposed development of ‘Subarnarekha Port’ in Odisha.
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Year Event b) Kalinganagar Steel Plant- Start of commercial production in May 2016 and achieved one of the fastest ramp-up in a Greenfield project in India. Crude steel production c) in Financial Year 2016-17 was 1.68 MTPA. d) ‘World’s Most Ethical Company Award‘ 2017 –Recognised for the fifth time by Ethisphere. e) ‘Best Risk Management Practice’ Award in the category of Metals & Mining at the 3rd India Risk Management Awards 2017. f) Winner in the ‘Iron & Steel’ sector for the Dun & Bradstreet Corporate Awards 2016. g) Tata Tiscon & Tata Shaktee have been selected as 'Consumer Superbrand' for 2016-17 by Superbrands India Pvt. Ltd. for the third consecutive edition h) 6th EPC awards in the 'Outstanding Company in Steel' category for exceptional contribution towards infrastructure and construction sector. i) ‘World’s Most Ethical Company Award‘ 2017 - Recognised for the fifth time by Ethisphere. a) Winner of the MINT Corporate Strategy Awards in the ‘Renewals’ category. b) The OMQ (Ore, Mines & Quarries) Division conferred the ‘Energy and Environment Foundation Global Water Conservation Award 2018’ in Platinum Category at the World Water Summit 2018. 2017-2018 c) The Noamundi Iron Mine (NIM) of Tata Steel has been accorded the ‘Five Star rating’ for sustainable development in FY17 in for the 2nd consecutive year. d) ‘Asia’s Best Treasury Team’ award by the Hong Kong based Corporate Treasurer, an independent print publication in Asia dedicated to serving treasury teams and chief financial officers. a) World Economic Forum recognises Tata Steel steelmaking plant at IJmuiden in the Netherlands as a ‘factory of the future’ b) Joined the CII led collegium of futuristic business houses to pledge support to the start-up ecosystem through the CII Startupreneur Awards 2018 to award India’s top start-ups c) Innovative Practices Award 2018 on Sustainable Development Goals (SDGs) for its "Thousand Schools Programme" by UN Global Compact Network India (GCNI) d) Retained Industry Leader position in FY18 and ranked second overall in the 2018-2019 DJSI assessment, 2017 e) Best Risk Management Framework & Systems Award 2019 by CNBC TV18 f) Steel Sustainability Champions (2017) by World Steel Association g) CII-ITC Sustainability Awards 2018 for Excellence in Biodiversity h) ‘Most Ethical Company’ award from Ethisphere Institute for the sixth time (2018) i) Dun & Bradstreet Corporate Awards 2018) j) Golden Peacock HR Excellence Award by Institute of Directors (2018) k) Golden Peacock Award for Risk Management 2018 a) Tata Steel wins the ‘Global Slag Company of the Year’ award at the 14th Global Slag Conference and Exhibition 2019 2019-2020 b) Tata Steel Bara Tertiary Treatment Plant wins the ‘Industrial Water Project of the Year 2019’ Award by Global Water Intelligence
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Year Event c) Tata Steel’s structural hollow steel brand ‘Tata Structura’ is now a Superbrand; d) Tata Steel wins the prestigious Dun & Bradstreet Corporate Award 2019; e) Tata Steel Kalinganagar joins the World Economic Forum's Global Lighthouse Network; f) Tata Steel mines receive 20 Awards for Excellence in Environmental Management Practices Tata Structura wins India’s Most Trusted Brand Award from International Brand Consulting Corporation; g) Tata Steel's Chief of Corporate Sustainability, Madhulika Sharma, selected as one of Asia’s Top Sustainability Superwomen by Global Reporting Initiative; h) Tata Steel's Digital initiatives honoured as ‘Business Transformer’ at the 14th Annual CIO100 Awards; i) Tata Steel’s mines awarded the FIMI Bala Gulshan Tandon Excellence Award; j) Tata Steel conferred the 'Best Integrated Report Award' for 2018 by Asian Centre for Corporate Governance & Sustainability; k) Tata Steel wins three awards at the worldsteel's 10th Steelie Awards; l) Tata Steel honoured at National CSR Awards for its work on maternal and child health; m) Tata Steel recognised as worldsteel’s Climate Action Member; n) Tata Steel’s ‘The Green School Project’ made its presence at the UN Climate Change Conference (COP25) for the second year in a row; o) ‘Tata Steelium’ honoured with the CII Award for Customer Centricity 2019; p) Tata Steel’s mines and collieries win National Safety Awards for excellence in safety practices; q) Tata Steel recognised among India’s Best Workplaces: Large Organization, 2020; r) Tata Steel Kalinganagar bags the National Energy Conservation Award 2019; s) ‘The Green School’ Project makes its presence at the World Sustainable Development Summit 2020; t) Tata Steel Limited features among India’s Best Workplaces in Manufacturing 2020; u) Tata Steel recognised as global leader for engaging its supply chain on climate change; v) Tata Steel named as one of the 2020 World's Most Ethical Companies by Ethisphere
Achievements
Some of the key achievements/awards received in recent years are as follows:
• Award for Corporate Social Responsibility in Public Health by US-India Business Council, Population Services International and The Center for Strategic and International Studies. • Greentech Safety Gold Award 2006 to Noamundi mines. • IT User Category Award in IT Awards Competition organized by the Confederation of Indian Industry and the Department of Information Technology, Government of Orissa. • West Bokaro Division of Tata Steel honoured with the commendation certificate for ‘National Energy Conservation Award’ in appreciation of their efforts in energy conservation in the mining sector for the year 2006.
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• Awarded the ‘Civil Society Award’ by UNAIDS for its exemplary role in fighting against HIV in India. • Tata Steel’s Noamundi Iron Ore mine won the First Prize for overall performance in the ‘Highly Mechanized Iron Ore Mines’ category, in the 44th Annual Mines Safety Week Celebrations 2006 for Chaibasa region. • Won the Best Governed Company Award 2006 presented by the Asian Centre for Corporate Governance. • Tata Steel Conferred Prime Minister's Trophy for Best Integrated Steel Plant Award for the Fifth Time. • Conferred the first CII—ITC Sustainability Award for the year 2006. • Awarded the Deming Application Prize for excellence in Total Quality Management in Nov 2008 • The Golden Peacock Global Corporate Social Responsibility Award for its continual commitment to ethical behavior and its contribution to economic development while improving the life of the community. • The Economic Times Company of the Year Award for making a fundamental difference to the way business is done. • The Best Establishment Award by the President of India, Mrs. Patibha Devi Singh Patil. • The Most Admired Knowledge Enterprise (MAKE) Asia Award (five times). • The TERI Corporate Award for the Company’s HIV/AIDS initiatives. • The Think Odisha Leadership Award for 100 years of service to the nation. • National Safety Awards to the West Bokaro and Jharia divisions. • HMS Faglig Forum, the organisation of professional and industrial bodies for health, environment and safety professionals in Norway awarded its 2008 prize to Corus Packaging Plus in March 2009. • Corus’ Scunthorpe site was recognised by the North Lincolnshire Health and Safety Group as one of the most improved companies for accident prevention within the group in March 2009. • Corus Tubes Maastricht received a national Good Practice Award from the European Agency for Safety and Health at Work in November 2008. • A CSR Award from Walsall Town Council in March 2009 to Corus Distribution UK & Ireland for setting up a new approach to work experience. • Confidex Sustain®, the world’s first cradle-to-cradle CarbonNeutral building envelope from Corus Colors, was recognised by four major awards, including: • A 2008 Welsh Marketing Award from The Chartered Institute of Marketing in Wales. • The Chartered Institute for Waste Management’s Award for Sustainable Product Development of the Year, which rewards environmental excellence and products that have been designed or produced to improve sustainability. • NatSteel Holdings bagged the Platinum Singapore HEALTH (Helping Employees Attain Life Time Health) Award in November 2008. • NatSteel Holdings won the Work-Life Excellence (WLE) Award in August 2008 for the third time running. • SCSC, a subsidiary of Tata Steel Thailand, received the Excellence in Manufacture Award for Quality, Environment and Safety Management and the award for Logistics Management from the Department of Primary Industries and Mines of Thailand’s Ministry of Industry. • NatSteel Xiamen Ltd. received accreditation from the Australian Certification Authority for Reinforcing Steel (ACRS). • Wuxi Jinyang Metal Products Co. was awarded the ISO 14001 accreditation for environment protection. • CSR Excellence Award 2010 by ASSOCHAM (Associated Chambers of Commerce & Industry
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of India) • FE- EVI Green Business Leadership Award in the iron & Steel category for the year 2009-10 • Five HR awards by ‘Asia’s Best Employer Brand Awards 2010’ for Talent Management, Best HR Strategy in line with Business, Excellence in Training, CEO with HR Orientation and HR Leadership Award • RashtriyaKhelProtsahan Puruskar-2010 award for outstanding contribution in the field of sports in the category of ‘Financial Support for Sports Excellence • India’s Most Admired Company by FORTUNE and Hay Group. • Deming Grand Prize 2012 – The First Integrated Steel Company in the World to win this Award. • ‘Business of the Year’ award at CII-ITC Sustainability Award 2014. • Winner in the ‘Iron & Steel’ sector for the Dun & Bradstreet Corporate Awards 2016 • Indian ‘Most Admired Knowledge Enterprises’ (MAKE) Award 2013 at CII’s ‘Knowledge Summit 2014’ to recognize organizations (founded and headquartered in India) for good work in area of Knowledge Management. • Business Today Award for ‘Best Company to Work for’ in the core sector. • Global Steel Industry Leader in the Dow Jones Sustainability Index 2016 • India’s 1st Steel company to receive ‘GreenCo Platinum Rating’ by CII - Green Business Centre • Awarded ‘A’ Rating - Climate Leadership Band by CDP for Climate Change disclosures for Supply Chain • Noamundi Iron Mine and Joda East Iron Mine accorded ‘Five Star rating’ for its sustainable mining practices by Ministry of Mines, Government of India. ii. Corporate Structure
Tata Steel Limited had the following subsidiaries, joint ventures and associates as on December 31, 2019:
Ownership Sl. No. Name of the Company (%) A. Subsidiaries (Direct)
1. ABJA Investment Co. Pte. Ltd. 100.00 2. Adityapur Toll Bridge Company Limited 88.50 3. Tata Steel Special Economic Zone Limited 100.00 4. Indian Steel & Wire Products Ltd. 95.01 Tata Steel Utilities and Infrastructure Services Limited 5. (Formerly known as Jamshedpur Utilities & Services Company 100.00 Limited) 6. Mohar Export Services Pvt. Ltd 66.46 7. NatSteel Asia Pte. Ltd. 100.00 8. Rujuvalika Investments Limited 100.00 9. T S Alloys Limited 100.00 10. Tata Korf Engineering Services Ltd. 100.00 11. Tata Metaliks Ltd. 55.06 47
Ownership Sl. No. Name of the Company (%) Tata Steel Long Products Limited (Formerly known as Tata Sponge Iron 12. Limited) 75.91 13. Tata Steel (KZN) (Pty) Ltd. 90.00 14. T Steel Holdings Pte. Ltd. 100.00 15. Tata Steel Odisha Limited 100.00 Tata Steel Downstream Products Limited (Formerly known as Tata Steel 16. 100.00 Processing and Distribution Limited) 17. Tayo Rolls Limited 54.91 18. Tata Pigments Limited 100.00 19. The Tinplate Company of India Ltd 74.96 20. Tata Steel Foundation 100.00 21. Jamshedpur Football and Sporting Private Limited 100.00 22. Sakchi Steel Limited 100.00 23. Jugsalai Steel Limited 100.00 24. Noamundi Steel Limited 100.00 25. Straight Mile Steel Limited 100.00 26. Bamnipal Steel Limited 100.00 27. Bistupur Steel Limited 100.00 28. Jamadoba Steel Limited 100.00 29. Dimna Steel Limited 100.00 30. Bhubaneshwar Power Private Limited 100.00 31. Creative Port Development Private Limited 51.00 B. Subsidiaries (Indirect)
1. Haldia Water Management Limited 60.00 2. Kalimati Global Shared Services Limited 100.00 3. TS Asia (Hong Kong) Ltd. 100.00 4. TSIL Energy Limited 100.00 5. T S Global Holdings Pte Ltd. 100.00 6. Orchid Netherlands (No.1) B.V. 100.00 7. NatSteel Holdings Pte. Ltd. 100.00 8. Easteel Services (M) Sdn. Bhd. 100.00 9. Eastern Steel Fabricators Philippines, Inc. 67.00
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Ownership Sl. No. Name of the Company (%) 10. NatSteel Recycling Pte Ltd. 100.00 11. NatSteel Trade International Pte. Ltd. 100.00 12. The Siam Industrial Wire Company Ltd. 100.00 13. TSN Wires Co. Ltd. 60.00 14. Tata Steel Europe Limited 100.00 15. Apollo Metals Limited 100.00 16. Bell & Harwood Limited 100.00 17. Blastmega Limited 100.00 18. Bore Samson Group Limited 100.00 19. Bore Steel Limited 100.00 20. British Guide Rails Limited 100.00 21. British Steel Corporation Limited 100.00 22. British Steel Directors (Nominees) Limited 100.00 23. British Steel Engineering Steels (Exports) Limited 100.00 24. British Steel Nederland International B.V. 100.00 25. British Steel Service Centres Limited 100.00 26. C V Benine 76.92 27. C Walker & Sons Limited 100.00 28. Catnic GmbH 100.00 29. Catnic Limited 100.00 30. CBS Investissements SAS 100.00 31. Tata Steel Mexico SA DE CV 100.00 32. Cogent Power Limited 100.00 33. Color Steels Limited 100.00 34. Corbeil Les Rives SCI 67.30 35. Corby (Northants) & District Water Company Limited 100.00 36. Cordor (C& B) Limited 100.00 37. Corus CNBV Investments 100.00 38. Corus Cold drawn Tubes Limited 100.00 39. Corus Engineering Steels (UK) Limited 100.00 40. Corus Engineering Steels Holdings Limited 100.00 41. Corus Engineering Steels Limited 100.00 49
Ownership Sl. No. Name of the Company (%) 42. Corus Engineering Steels Overseas Holdings Limited 100.00 43. Corus Engineering Steels Pension Scheme Trustee Limited 100.00 44. Corus Group Limited 100.00 45. Corus Holdings Limited 100.00 46. Corus International (Overseas Holdings) Limited 100.00 47. Corus International Limited 100.00 48. Corus International Romania SRL. 100.00 49. Corus Investments Limited 100.00 50. Corus Ireland Limited 100.00 51. Corus Large Diameter Pipes Limited 100.00 52. Corus Liaison Services (India) Limited 100.00 53. Corus Management Limited 100.00 54. Corus Property 100.00 55. Corus Service Centre Limited 100.00 56. Corus Steel Service STP LLC 100.00 57. Corus Tubes Poland Spolka Z.O.O 100.00 58. Corus UK Healthcare Trustee Limited 100.00 59. Corus Ukraine Limited Liability Company 100.00 60. Crucible Insurance Company Limited 100.00 61. Degels GmbH 100.00 62. Demka B.V. 100.00 63. DSRM Group Plc. 100.00 64. Europressings Limited 100.00 65. Firsteel Group Limited 100.00 66. Firsteel Holdings Limited 100.00 67. Fischer Profil GmbH 100.00 68. Gamble Simms Metals Limited 100.00 69. Grant Lyon Eagre Limited 100.00 70. H E Samson Limited 100.00 71. Hadfields Holdings Limited 62.50 72. Halmstad Steel Service Centre AB 100.00 73. Hammermega Limited 100.00 50
Ownership Sl. No. Name of the Company (%) 74. Hille & Muller GmbH 100.00 75. Hille & Muller USA Inc. 100.00 76. Hoogovens USA Inc. 100.00 77. Huizenbezit “Breesaap” B.V. 100.00 78. Inter Metal Distribution SAS 100.00 79. Layde Steel S.L. 100.00 80. Lister Tubes Limited 100.00 81. London Works Steel Company Limited 100.00 82. Montana Bausysteme AG 100.00 83. Naantali Steel Service Centre OY 100.00 84. Nationwide Steelstock Limited 100.00 85. Norsk Stal Tynnplater AS 100.00 86. Norsk Stal Tynnplater AB 100.00 87. Orb Electrical Steels Limited 100.00 88. Ore Carriers Limited 100.00 89. Oremco Inc. 100.00 90. Plated Strip (International) Limited 100.00 91. Precoat International Limited 100.00 92. Precoat Limited 100.00 93. Rafferty-Brown Steel Co Inc Of Conn. 100.00 94. Round Oak Steelworks Limited 100.00 95. Runblast Limited 100.00 96. Runmega Limited 100.00 97. S A B Profiel B.V. 100.00 98. S A B Profil GmbH 100.00 99. Seamless Tubes Limited 100.00 100. Service Center Gelsenkirchen GmbH 100.00 101. Service Centre Maastricht B.V. 100.00 102. Societe Europeenne De Galvanisation (Segal) Sa 100.00 103. Staalverwerking en Handel B.V. 100.00 104. Steel StockHoldings Limited 100.00 105. Steelstock Limited 100.00 51
Ownership Sl. No. Name of the Company (%) 106. Stewarts & Lloyds Of Ireland Limited 100.00 107. Stewarts And Lloyds (Overseas) Limited 100.00 108. Subarnarekha Port Private Limited 50.41 109. Surahammar Bruks AB 100.00 110. Swinden Housing Association Limited 100.00 111. Tata Steel Belgium Packaging Steels N.V. 100.00 112. Tata Steel Belgium Services N.V. 100.00 113. Tata Steel Denmark Byggsystemer A/S 100.00 114. Tata Steel Europe Distribution BV 100.00 115. Tata Steel Europe Metals Trading BV 100.00 116. Tata Steel France Batiment et Systemes SAS 100.00 117. Tata Steel France Holdings SAS 100.00 118. Tata Steel Germany GmbH 100.00 119. Tata Steel IJmuiden BV 100.00 120. Tata Steel International (Americas) Holdings Inc 100.00 121. Tata Steel International (Americas) Inc 100.00 122. Tata Steel International (Canada) Holdings Inc 100.00 123. Tata Steel International (Czech Republic) S.R.O 100.00 124. Tata Steel International (Denmark) A/S 100.00 125. Tata Steel International (Finland) OY 100.00 126. Tata Steel International (France) SAS 100.00 127. Tata Steel International (Germany) GmbH 100.00 128. Tata Steel International (South America) Representações LTDA 100.00 129. Tata Steel International (Italia) SRL 100.00 130. Tata Steel International (Middle East) FZE 100.00 131. Tata Steel International (Nigeria) Ltd. 100.00 132. Tata Steel International (Poland) sp Zoo 100.00 133. Tata Steel International (Schweiz) AG 100.00 134. Tata Steel International (Sweden) AB 100.00 135. Tata Steel International (India) Limited 100.00 136. Tata Steel International Iberica SA 100.00 137. Tata Steel Istanbul Metal Sanayi ve Ticaret AS 100.00 52
Ownership Sl. No. Name of the Company (%) 138. Tata Steel Maubeuge SAS 100.00 139. Tata Steel Nederland BV 100.00 140. Tata Steel Nederland Consulting & Technical Services BV 100.00 141. Tata Steel Nederland Services BV 100.00 142. Tata Steel Nederland Technology BV 100.00 143. Tata Steel Nederland Tubes BV 100.00 144. Tata Steel Netherlands Holdings B.V. 100.00 145. Tata Steel Norway Byggsystemer A/S 100.00 146. Tata Steel Sweden Byggsystem AB 100.00 147. Tata Steel UK Consulting Limited 100.00 148. Tata Steel UK Holdings Limited 100.00 149. Tata Steel UK Limited 100.00 150. Tata Steel USA Inc. 100.00 151. The Newport And South Wales Tube Company Limited 100.00 152. The Stanton Housing Company Limited 100.00 153. The Templeborough Rolling Mills Limited 100.00 154. Thomas Processing Company 100.00 155. Thomas Steel Strip Corp. 100.00 156. Toronto Industrial Fabrications Limited 100.00 157. TS South Africa Sales Office Proprietary Limited 100.00 158. Tulip UK Holdings (No.2) Limited 100.00 159. Tulip UK Holdings (No.3) Limited 100.00 160. U.E.S. Bright Bar Limited 100.00 161. UK Steel Enterprise Limited 100.00 162. UKSE Fund Managers Limited 100.00 163. Unitol SAS 100.00 164. Walker Manufacturing And Investments Limited 100.00 165. Walkersteelstock Ireland Limited 100.00 166. Walkersteelstock Limited 100.00 167. Westwood Steel Services Limited 100.00 168. Whitehead (Narrow Strip) Limited 100.00 169. British Steel Trading Limited 100.00 53
Ownership Sl. No. Name of the Company (%) 170. T S Global Minerals Holdings Pte Ltd. 100.00 171. Al Rimal Mining LLC 70.00 172. TSMUK Limited 100.00 173. Tata Steel Minerals Canada Limited 77.68 174. T S Canada Capital Ltd 100.00 175. Tata Steel International (Singapore) Holdings Pte. Ltd. 100.00 176. Tata Steel International (Shanghai) Ltd. 100.00 177. Tata Steel International (Asia) Limited 100.00 178. Tata Steel (Thailand) Public Company Ltd. 67.90 179. N.T.S Steel Group Plc. 99.76 180. The Siam Construction Steel Co. Ltd. 99.99 181. The Siam Iron And Steel (2001) Co. Ltd. 99.99 182. T S Global Procurement Company Pte. Ltd. 100.00 183. ProCo Issuer Pte. Ltd. 100.00 184. Tata Steel BSL Limited (formerly known as Bhushan Steel Limited) 72.65 185. Bhushan Energy Limited 99.99 186. Bhushan Steel (Orissa) Ltd. 100.00 187. Bhushan Steel (South) Ltd. 100.00 188. Bhushan Steel (Madhya Bharat) Ltd. 100.00 189. Bhushan Steel (Australia) PTY Ltd. 90.97 190. Bowen Energy PTY Ltd. 100.00 191. Bowen Coal PTY Ltd. 100.00 192. Bowen Consolidated PTY Ltd. 100.00 C. Jointly Controlled Entities (Direct)
1. Himalaya Steel Mills Services Private Limited 26.00 2. mjunction services Limited 50.00 3. S & T Mining Company Private Limited 50.00 4. Tata Bluescope Steel Private Ltd. 50.00 5. Tata NYK Shipping Pte Ltd. 50.00 6. Jamshedpur Continuous Annealing and Processing Company Private Limited 51.00 7. T M Mining Company Limited 74.00 8. TM International Logistics Limited 51.00 54
Ownership Sl. No. Name of the Company (%) 9. Industrial Energy Limited 26.00 10. Jamipol Limited 39.78 11. Nicco Jubilee Park Limited 25.31 12. Medica T S Hospital Private Limited 26.00 D. Jointly Controlled Entities (Indirect)
1. Naba Diganta Water Management Limited 74.00 2. SEZ Adityapur Limited 51.00 3. Air Products Llanwern Limited 50.00 4. Laura Metaal Holding B.V. 49.00 5. Ravenscraig Limited 33.33 6. Tata Steel Ticaret AS 50.00 7. Texturing Technologies Limited 50.00 8. Hoogovens Court Roll Service Technologies VOF 50.00 9. BlueScope Lysaght Lanka (Pvt) Ltd 100.00 10. Tata NYK Shipping (India) Pvt. Ltd. 100.00 11. International Shipping and Logistics FZE 100.00 12. TKM Global China Ltd 100.00 13. TKM Global GmbH 100.00 14. TKM Global Logistics Limited 100.00 15. Minas De Benga (Mauritius) Limited 35.00 16. Andal East Coal Company Pvt. Ltd. 33.89 E. Associates (Direct)
1. Kalinga Aquatics Ltd. 30.00 2. Kumardhubi Fireclay & Silica Works Ltd. 27.78 3. Kumardhubi Metal Casting and Engineering Limited 49.31 4. Strategic Energy Technology Systems Private Limited 25.00 5. Tata Construction & Projects Ltd. 27.19 6. TRF Limited 34.11 7. Malusha Travels Pvt Ltd. 33.23 F. Associates (Indirect)
1. European Profiles (M) Sdn. Bhd. 20.00 2. Albi Profils SRL 30.00 55
Ownership Sl. No. Name of the Company (%) 3. GietWalsOnderhoudCombinatie B.V. 50.00 4. Hoogovens Gan Multimedia S.A. De C.V. 50.00 5. ISSB Limited 50.00 6. Wupperman Staal Nederland B.V. 30.00 7. Fabsec Limited 25.00 8. New Millennium Iron Corp. 26.18 9. 9336-0634 Québec Inc 33.33 10. TRF Singapore Pte Limited 100.00 11. TRF Holding Pte Limited 100.00 12. Dutch Lanka Trailer Manufacturers Limited 100.00 13. Dutch Lanka Engineering (Private) Limited 100.00 14. Bhushan Capital & Credit Services Private Limited 42.58 15. Jawahar Credit & Holdings Private Limited 39.65
Management Structure
We have a well-defined operating structure to ensure that the Company is on track to achieve its vision and strategic objectives. Our executive management rests with Mr. T. V. Narendran, Chief Executive Officer and Managing Director, and Mr. Koushik Chatterjee, Executive Director and Chief Financial Officer. We have a strong, diverse, highly qualified and richly experienced leadership team with a track record of excellence and passion for performance. iii. Key Operational and Financial Parameters for the last three audited years
The Company has adopted Indian Accounting Standard (referred to as ‘Ind AS’) with effect from April 1, 2016; and accordingly, the financial results set out below have been prepared in accordance with the recognition and measurement principles laid down as per Ind AS 34 “Interim Financial Reporting” as prescribed under section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting principles generally accepted in India.
• Consolidated balance sheet highlights for the half year ended September 30, 2019 and the financial years ended March 31, 2019, March 31, 2018 and March 31, 2017 (in Rs. in crores) In IND AS Parameters Half year ended Year ended Year ended Year ended September 30, March 31, March 31, March 31, 2019 2019 2018 2017 Net worth 75,303 71,290 61,807 39,421 Total debt 111,548 100,816 92,147 83,014 of which – Non current maturities of 86,451 80,343 72,789 64,022 long term borrowings
56
In IND AS Parameters Half year ended Year ended Year ended Year ended September 30, March 31, March 31, March 31, 2019 2019 2018 2017 - Short term borrowings 16,295 10,802 15,885 18,328 - Current maturities of long 8,803 9,671 3,473 664 term borrowings Net fixed assets (Tangible) 138,213 136,407 106,483 102,395 Non-current assets 184,926 174,591 141,881 122,398 Cash and cash equivalents 3,719 3,341 7,938 4,921 Current investments 817 2,525 14,909 5,673 Current assets 58,571 58,991 67,877 50,935 Total Non-current liabilities 104,035 101,259 92,289 83,571 Total Current liabilities 64,159 61,034 55,661 50,341 Current ratio 1.48 1.39 1.46 1.44 Gross debt/equity ratio 1.52 1.51 1.82 1.98
• Consolidated profit and loss statement highlights for the nine-month period ended December 31,2019, and the financial years ended March 31, 2019, March 31, 2018 and March 31, 2017
In IND AS Period Half year Year ended Year ended Year ended Parameters ended ended March 31, March 31, March 31, December September 2019 2018 2017 31, 2019 30, 2019 Net sales (net of excise) 106,574 70,961 159,090 123,675 112,952 (including other income) EBITDA (excluding finance 13,066 9,408 29,770 21,369 17,018 income and before exceptional items) EBIT (including other income and 6,850 5,210 22,428 15,627 11,345 before exceptional items) Interest 5,608 3,678 7,660 5,455 5,072 Tax (2,305) (2,926) 6,718 3,392 2,778 expense/(credit) Profit After Tax 2,788 4,016 9,098 17,762 (4,169) Profit/(loss) for the period (after minority interests 3,038 4,123 10,218 13,434 (4,241) and share of profit/(loss) of associates)
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Dividend amount 1,786 1,786 1,369 1,158 925 (including DDT)
• Standalone balance sheet highlights for the half year ended September 30, 2019 and the financial years ended March 31, 2019, March 31, 2018 and March 31, 2017 (as per IND AS) (in Rs. Crore) In IND AS Parameters Half year ended Year ended Year ended Year ended September 30, March 31, March 31, March 31, 2019 2019 2018 2017 Net worth 76,092 72,730 63,790 51,934 Total debt of which 31,492 29,701 28,126 28,285 – Non current maturities of 28,725 26,651 24,569 24,694 long term borrowings - Short term borrowings 1507 8 670 3,240 - Current maturities of long 1,260 3,042 2,887 351 term borrowings Net fixed assets (Tangible) 73,863 76,103 76,584 77,904 Non-current assets 122,913 120,463 90,470 91,355 Cash and cash equivalents (incl other balances with 1750 718 4,697 970 banks) Current investments 0 477 14,640 5,310 Current assets 17,770 17,036 34,644 20,110 Non-current liabilities 39,042 39,175 35,717 36,475 Current liabilities 25,549 25,594 25,607 23,056 Debt service coverage ratio 1.54 6.23 5.73 2.72 Gross debt/equity ratio 0.42 0.42 0.49 0.56 Note - The financial information provided in the above tables are as per Ind AS.
• Consolidated profit and loss statement highlights for the nine-month period ended December 31,2019, and the financial years ended March 31, 2019, March 31, 2018 and March 31, 2017 (in Rs. Crore) In IND AS Parameters Period ended Year ended Year ended Year ended December 31, March 31, March 31, March 31, 2019 2019 2018 2017 Net sales (net of excise) 46,557 73,016 59,924 48,558 (including other income) EBITDA (excluding finance income and before 11,435 20,744 15,800 11,944 exceptional items) EBIT (including other income 8,517 16,941 12,072 8,403 and before exceptional items) Interest 2,227 2,824 2,811 2,689 Tax expense/(credit) -474 5,694 2,469 1,912 PAT 7,181 10,533 4,170 3,445 Dividend amount (including 1,787 1,371 1,160 925 DDT) Interest coverage ratio N.A. 9.57 7.03 4.21 58
Debt service coverage ratio N.A. 6.23 5.73 2.72
• Gross Debt/Equity Ratio of the Company (Standalone):-
Before the issue of Debentures* 0.42 After the issue of Debentures* 0.43 * Based on the September 30, 2019 standalone financial statements iv. Project cost and means of financing of new projects
Not Applicable
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(c) Brief history of the Issuer
i. Details of Share Capital as on December 31, 2019
Authorised: 1,75,00,00,000 Ordinary Shares of ₹10.00 each 17,50,00,00,000.00 (31.03.2019: 17,50,00,000 Ordinary Shares of
₹10.00 each)
35,00,00,000 “A” Ordinary Shares of ₹10.00 each 3,50,00,00,000.00 (31.03.2019: 35,00,00,000 Ordinary Shares of
₹10.00 each)
Cumulative Redeemable Preference Shares of 2,50,00,000 2,50,00,00,000.00 ₹100.00 each (31.03.2019: 2,50,00,000 Shares of ₹100.00 each)
Cumulative Convertible Preference Shares of 60,00,00,000 60,00,00,00,000.00 ₹100.00 each (31.03.2019: 6,00,00,000 Shares of ₹100.00 each)
83,50,00,00,000.00
Issued: 1,12,75,20,570 Ordinary Shares of ₹10.00 each 11,27,52,05,700.00 (31.03.2019: 1,12,75,20,570 Ordinary Shares of
₹10.00 each) Ordinary Shares of ₹10.00 each (Partly Paid up) 77,69,72,800.00 7,76,97,280 (31.03.2019: 7,76,97,280 Ordinary Shares of ₹2.504 each paid up) 12,05,21,78,500.00
Subscribed and
Paid up: A. Fully Paid 1,12,64,90,211 Ordinary Shares of ₹10.00 each fully paid up 11,26,49,02,110.00 (31.03.2018: 1,12,64,84,815 Ordinary Shares of ₹10.00 each) (27.07.2018: 324 Ordinary Shares of ₹10.00 each)
(18.12.2018: 3866 Ordinary Shares of ₹10.00 each) (27.03.2019: 675 Ordinary Shares of ₹10.00 each) (14.11.2019: 531 Ordinary Shares of ₹10.00 each) Amount paid up on 3,89,516 Ordinary Add: 20,00,000.00 Shares forfeited (31.03.2018: 3,89,516 Shares of ₹10.00
each) B. Partly Paid Ordinary Shares of ₹10.00 each (paid-up ₹2.504 each) 7,76,36,788 19,44,02,517.15 (31.03.2018: 7,76,34,625 Ordinary Shares of ₹2.504 each paid up)
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(27.07.2018: 162 Ordinary Shares of ₹10.00 each paid- up ₹2.504) (18.12.2018: 1,918 Ordinary Shares of ₹10.00 each paid-up
₹2.504) (14.11.2019: 83 Ordinary Shares of ₹10.00 each paid-up ₹2.504)
ii. Changes in capital structure as on December 31, 2019 (for last five years)
There has been no change in the authorized share capital of the Company in last 5 years.
iii. Equity share capital history of the Company as on December 31, 2019 (for last five years)
Consi Cumulative derat ion No of Face Issue (Cas Nature of Date of Ordinary Value Price h, Allotment No of Ordinary Equity Share Equity Share Allotment Shares (₹) (₹) other (Remarks) Shares Capital (₹) Premium than cash, etc.) Allotment of Shares kept in March 11, 176 10 300 Cash abeyance in 97,12,15,405 9,71,41,54,050 51,040 2014 Rights issue 2007 Allotment of Shares kept in December 20 10 300 Cash abeyance in 97,12,15,425 9,71,41,54,250 5,800 1, 2014 Rights issue 2007 Allotment of Shares kept in December 14 10 600 Cash abeyance in 97,12,15,439 9,71,41,54,390 8,260 1, 2014 Rights issue 2007 Allotment of Shares kept in May 15 , 450 10 300 Cash abeyance in 97,12,15,889 9,71,41,58,890 1,30,500 2017 Rights issue 2007 15,52,68,926 10 510 Cash 1,12,64,84,815 11,26,48,48,150 77,63,44,63,000 March 14, 10 (paid Rights Issue 2018 7,76,34,625 up 615 Cash 2018 1,20,41,19,440 11,45,92,45,251 111,76,13,35,149 ₹2.504) 324 10 510 Cash Allotment of 1,20,41,19,764 11,45,92,48,491 1,62,000 Shares kept in July 27, 10 (paid abeyance in 2018 162 up 615 Cash Rights issue 1,20,41,19,926 11,45,92,48,897 2,45,42.352 ₹2.504) 2018 December 3,840 10 510 Allotment of 1,20,41,23,766 11,45,92,87,297 19,20,000 Cash 18, 2018 1,918 10 (paid 615 Shares kept in 1,20,41,25,684 11,45,92,92,099 2,90,569.328 61
up abeyance in ₹2.504) Rights issue 2018 15 10 300 1,20,41,25,699 11,45,92,92,249 4,350 Allotment of Shares kept in Cash 11 10 600 abeyance in 1,20,41,25,710 11,45,92,92,359 6,490 Rights issue 2007 Allotment of Shares kept in March 27, 675 10 300 Cash abeyance in 120,41,26,385 11,45,92,99,109 1,95,750 2019 Rights issue 2007 Allotment of Shares kept in 210 10 300 Cash abeyance in 120,41,26,595 11,45,93,01,209 60,900 Rights issue 2007 Allotment of Shares kept in 154 10 600 Cash abeyance in 120,41,26,749 11,45,93,02,749 90,860 Rights issue November 2007 14, 2019 Allotment of Shares kept in 167 10 510 Cash abeyance in 120,41,26,916 11,45,93,04,419 83,500 Rights issue 2018 Allotment of 10 (paid Shares kept in 83 up 615 Cash abeyance in 120,41,26,999 11,45,93,04,627 12,574.17 ₹2.504) Rights issue 2018
iv. Details of any Acquisition or Amalgamation in the last 1 year
• Tata Steel through its subsidiary Tata Sponge Limited (Erstwhile Tata Steel Sponge Iron Limited TSIL) has taken over Usha Martin – Steel Business unit on April 9, 2019, which is an Integrated Steel Plant to manufacture alloyed speciality steel in long products segments like Wire Rods and Bars.
• Tata Steel Limited (Company) has on July 24, 2019, subscribed to 2,58,43,967 Rights Equity Shares of Tata Sponge Iron Limited (subsidiary of the Company) at an issue price of ₹500/- per Rights Equity Share (including a premium of ₹490/- per Rights Equity Share) aggregating to ₹1,292.20 crore.
• In June 2019, Tata Tata Steel BSL Limited has successfully completed the acquisition of Bhushan Energy Limited (BEL) in accordance with the Approved Resolution Plan under the Corporate Insolvency Resolution Process of the Insolvency and Bankruptcy Code, 2016.Post acquisition, the company holds 99.99% of the total equity share capital of BEL
The Board of Directors of the Company at its meeting held on April 25, 2019, inter alia, have considered and approved the aforesaid Scheme pursuant to Sections 230 to 232 and other applicable 62
provisions of the Companies Act, 2013 read with the rules framed thereunder and SEBI Circular No. CFD/DIL3/CIR/2017/21 dated March 10, 2017, as amended from time to time, for the amalgamation of the Transferor Company 1, a wholly owned subsidiary of the Company, and the Transferor Company 2, an indirect subsidiary of the Company, into and with the Company, subject to the requisite statutory and regulatory approvals.
Tata Steel Limited has on March 28, 2019 acquired 27,97,000 equity shares of face value ₹10 each aggregating to ₹179,56,74,000, and 34,92,500 convertible warrants aggregating to ₹224,21,85,000 of Tata Metaliks Limited on preferential basis.
Tata Steel Limited has on March 25, 2019, acquired 230,00,00,000 – 8.89% Optionally Convertible Redeemable Preference Shares of Tata Steel BSL Limited on private placement basis aggregating to ₹2,300 crore
Tata Steel Limited has on March 22, 2019, acquired 670,00,00,000 – 8.89% Optionally Convertible Redeemable Preference Shares of Tata Steel BSL Limited on private placement basis aggregating to ₹6,700 crore.
Tata Steel Limited has on March 22, 2019, acquired 25,00,00,000, 12.5% Non-Convertible Redeemable Preference Shares of TRF Limited on private placement basis aggregating to Rs. 250 crore.
Tata Steel Limited has on March 20, 2019 acquired 1070,00,00,000 – 11.09% Non-Convertible Redeemable Preference Shares of Tata Steel BSL Limited aggregating to ₹10,700 crore v. Details of Reorganisation or Reconstruction in last 1 year
The Composite Scheme of Amalgamation of Bamnipal Steel Limited (‘Transferor Company 1’) and Tata Steel BSL Limited (formerly known as Bhushan Steel Limited) (‘Transferor Company 2’) into and with Tata Steel Limited (‘Company’ or ‘Transferee Company’):
The Board of Directors of the Company at its meeting held on April 25, 2019, inter alia, have considered and approved the aforesaid Scheme pursuant to Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, for the amalgamation of the Transferor Company 1, a wholly owned subsidiary of the Company, and the Transferor Company 2, an indirect subsidiary of the Company, into and with the Company, subject to the requisite statutory and regulatory approvals.
Post ‘no objection’ from designated stock exchange and confirmation from SEBI, the Scheme is pending approval from shareholders of the Company and Tata Steel BSL Limited at a duly convened meeting. Post shareholders’ approval, the Company will file the petition for approval of the Scheme with NCLT.
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(d) Details of shareholding of the Company i. Shareholding pattern of the Company as on December 31, 2019
Total shareholding Sr. Total No. of No. of shares in Particulars as % of total No equity shares Demat form no. of equity shares FULLY PAID Promoter and Promoter Group 35,98,80,601 35,98,80,601 31.95 I Public Shareholding 76,66,09,610 75,10,18,522 68.05 Total 1,12,64,90,211 1,11,08,99,123 100.00 PARTLY PAID Promoter and Promoter Group 3,89,42,999 3,89,42,999 50.16 II Public Shareholding 3,86,93,789 3,85,09,774 49.84 Total 7,76,36,788 7,74,52,773 100.00 Notes: Shares pledged or encumbered by the promoters (if any): As on December 31, 2019, Tata Sons Private Limited (Promoter) has pledged 1,39,80,000 Equity Shares representing 3.51% of the total shareholding of the Promoter Group and 1.16% of the total Share Capital of the Company ii. List of top 10 holders of equity shares of the Company as on December 31, 2019
Total shareholding No. of shares Sr. Total No. of as % of total Name of the shareholders held in demat No. equity shares no of Fully form Paid equity shares 1 Life Insurance Corporation Of India 10,14,02,067 10,14,02,067 9.00 HDFC Trustee Company Ltd. A/C HDFC 2 5,84,25,365 5,84,25,365 5.19 Balanced Advantage Fund Reliance Capital Trustee Co. Ltd. A/C 3 3,43,83,805 3,43,83,805 3.05 Nippon India Tax Saver (Elss) Fund ICICI Prudential Life Insurance 4 2,03,40,208 2,03,40,208 1.81 Company Limited 5 SBI-ETF Nifty 50 1,66,10,234 1,66,10,234 1.47 Abu Dhabi Investment Authority - 6 1,41,59,761 1,41,59,761 1.26 Merlion 7 Government Pension Fund Global 1,15,31,684 1,15,31,684 1.02 ICICI Prudential Balanced Advantage 8 1,14,54,303 1,14,54,303 1.02 Fund The Prudential Assurance Company 9 1,12,50,725 1,12,50,725 1.00 Limited NPS Trust- A/C Uti Retirement Solutions 10 Pension Fund Scheme - State 98,13,337 98,13,337 0.87 Government
List of top 10 holders of partly paid-up equity shares of the Company as on December 31, 2019 64
Total shareholding No. of equity Sr. Total no. of as % of total Name of the Shareholder shares held in No. equity shares no of Partly demat form Paid equity shares 1 Reliance Capital Trustee Co. Ltd 46,37,800 46,37,800 5.97 2 HDFC Trustee Company Limited 22,53,641 22,53,641 2.90 The New India Assurance Company 3 7,76,084 7,76,084 1.00 Limited 4 Jhunjhunwala Rekha Rakesh 5,40,000 5,40,000 0.70 5 Government Pension Fund Global 5,13,408 5,13,408 0.66 6 SBI Arbitrage Opportunities Fund 4,91,626 4,91,626 0.63 7 HDFC Life Insurance Company Limited 4,84,893 4,84,893 0.62 8 Shaileshkumar Rasiklal Shah 3,63,774 3,63,774 0.47 9 Franklin Templeton Investment Funds 3,32,388 3,32,388 0.43 10 Alpna Varshney 3,00,000 3,00,000 0.39
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(e) Details regarding the Directors of the Company i. Details of the current Directors of the Company
Director of Name, Age the Designation and Address Details of other Directorship (Years) Company DIN since Natarajan 56 Flat No. 21, 33 January 13, Public Companies: Chandrasekaran South 2017 Tata Consultancy Services Limited Non-Executive Condominium, Tata Motors Limited Chairman Pedder Road, The Indian Hotels Company DIN - 00121863 Opp. Sterling Limited Apartments, The Tata Power Company Limited Mumbai 400 026 Tata Global Beverages Limited
Private Companies: Tata Sons Private Limited
Section 8 Company: TCS Foundation
Other Bodies: Reserve Bank of India
Foreign Companies: Jaguar Land Rover Automotive PLC Mallika 60 West Side House May 21, Public Companies: Srinivasan, 3, Adyar Club 2012 Tractors and Farm Equipment Independent Gate Road, Raja Limited Director Annamalaipuram, TAFE Access Limited DIN- 00037022 Chennai 600 028 TAFE Reach Limited TAFE Properties Limited TAFE Motors and Tractors Limited The United Nilgiri Tea Estates Company Limited
Private Companies: Trust Properties Development Company Pvt. Ltd
Other Bodies: Chennai Willingdon Corporate Foundation Indian School of Business
Foreign Companies: AGCO Corporation, USA O. P. Bhatt, 68 Flat 03, Seagull, June 10, Public Companies: Independent Carmichael Road, 2013 Hindustan Unilever Limited Director – Cumballa Hill, Tata Consultancy Services Limited DIN- 00548091 Mumbai 400 026 Tata Motors Limited Aadhar Housing Finance Limited 66
Foreign Companies: Greenco Energy Holdings Limited Peter (Petrus) 66 Linnaeuslaan 12, February 7, Foreign Companies: Blauwhoff 2012 PP Haarlem, 2017 Royal Haskoning DHV Independent The Netherlands Blauwhoff International Director Consulting DIN- 07728872 Blue Court Holdings B.V. Stichting (Foundation) de PAN Kongstein AS Tata Steel Europe Limited Tata Steel Nederland BV Florengy AG Aman Mehta 73 115A, 2nd Floor, March 29, Public Companies: Independent Jor Bagh, Lodhi 2017 Wockhardt Limited Director Road, New Delhi Godrej Consumer Products DIN- 00009364 110 003 Limited Max Financial Services Limited Vedanta Limited
Foreign Companies: PCCW Limited HKT Limited, Hong Kong Deepak Kapoor 60 House No. K-42, April 1, Public Companies: Independent NDSE Part II, 2017 HCL Technologies Limited Director New Delhi Nayara Energy Limited DIN – 00162957 110049 Vadinar Oil Terminal Limited
Private Companies: Delhivery Private Limited Saurabh Agrawal 50 Flat No. 2803, August 10, Public Companies: Non-Executive Imperial Towers, 2017 Tata Capital Limited Director BB Nakashe The Tata Power Company Limited DIN: 02144558 Marg, Tardeo, Tata AIA Life Insurance Co. Ltd. Tulsiwadi, Tata AIG General Insurance Co. Mumbai-400034 Ltd. Tata Teleservices Limited Tata Sky Limited
Private Companies: Tata Sons Private Limited Gradis Trading Private Limited Vijay Kumar 61 6A, Jeevan Jyot, August 24, Public Companies: Sharma Setalvad Lane, 2018 ACC Limited Additional (Non- Napeansea Road, Mahindra & Mahindra Limited Executive) Director Mumbai – 400006 DIN: 02449088 T. V. Narendran, 54 Bungalow No. 5, C September Public Companies: Chief Executive Road, Northern 19, 2013 Straight Mile Steel Limited Officer & Town, East Sakchi Steel Limited Managing Singhbhum, Noamundi Steel Limited Director Jamshedpur 831001 Jugsalai Steel Limited DIN-03083605 Tata Steel BSL Limited Tata Steel Long Products Limited TRF Limited
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Section 8 Company: Tata Steel Foundation
Foreign Companies: Tata Steel Europe Limited T S Global Holdings Pte. Ltd Koushik 51 Flat No. 1803, November 9, Public Companies: Chatterjee, Signia Isles, G 2012 The Tinplate Company of India Executive Block, Bandra Ltd Director & Chief Kurla Complex, Tata Metaliks Limited Financial Officer Next to Sofitel Tata Steel BSL Limited DIN-00004989 Hotel Bandra East, Tata Steel Long Products Limited BKC Mumbai - TRF Limited 400 051 Section 8 Company: Tata Steel Foundation
Foreign Companies: T S Global Holdings Pte. Ltd T S Global Minerals Holdings Pte. Ltd T S Global Procurement Co. Pte. Ltd. Tata Steel Europe Ltd.
Other Bodies: World Steel Association, Belgium
Names of Directors of Tata Steel Limited appearing in the defaulters list of Reserve Bank of India, specific approval list of Export Credit Guarantee Corporation of India Ltd. and defaulters list of Credit Information Bureau (India) Limited. As on December 31, 2019: None
Names of the Authorities Name of Directors Name of the defaulter Company
Nil Nil Nil
68 ii. Details of the change in Directors since last three years
Director Date of of the Company Name, Designation and DIN Appointment/ since (In case of Remarks Resignation resignation/ removal) Mr. Vijay Kumar Sharma August 24, Appointed as Non- Non-Executive Director - 2018 Executive Director DIN: 02449088 Mr. Dinesh K. Mehrotra Ceased to be a Non-Executive Director May 16, 2018 October 22, 2012 Non-Executive DIN: 00142711 Director Mr. Ishaat Hussain Ceased to be a September 1, Non- Executive Director July 15, 1999 Non-Executive 2017 DIN:00027891 Director Mr. Andrew Robb Ceased to be an September 1, Independent Director November 22, 2007 Independent 2017 DIN:01911023 Director Mr. Saurabh Agrawal August 10, Appointed as Non- Non- Executive Director - 2017 Executive Director DIN: 02144558 Mr. Deepak Kapoor Appointed as an Independent Director April 1, 2017 - Independent DIN – 00162957 Director Mr. Aman Mehta Appointed as an March 29, Independent Director - Independent 2017 DIN – 00009364 Director Mr. Subodh Bhargava Ceased to be an March 29, Independent Director May 29, 2006 Independent 2017 DIN – 00035672 Director Mr. Jacobus Schraven Ceased to be an February 7, Independent Director May 17, 2007 Independent 2017 DIN – 01462126 Director Dr. Peter (Petrus) Blauwhoff Appointed as an February 7, Independent Director - Independent 2017 DIN – 07728872 Director Appointed as Mr. Natarajan Chandrasekaran January 13, Director and Non-Executive Director - 2017 Chairman of the DIN - 00121863 Board August 29, 1979 (Appointed Mr. Nusli Wadia Ceased to be an December 21, Independent Independent Director Independent 2016 Director at the AGM DIN – 00015731 Director held on August 14, 2014) Mr. Cyrus Mistry Ceased to be a December 19, Non-Executive Director May 21, 2012 Non-Executive 2016 DIN – 00010178 Director
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(f) Details regarding the auditors of the Company i. Details of the statutory auditors of the Company
Name Address Auditor since Price Waterhouse & Co 56 & 57, Block DN, Ground Floor, A Chartered Accountants Wing, Sector V, Salt Lake, Kolkata Financial Year 2017-18 LLP 700091, West Bengal ii. Details of change in Auditors since last 3 years:-
The term of Messrs Deloitte Haskins and Sells LLP, (previous Statutory Auditors of the Company) had concluded on the 110th Annual General Meeting of the Company, pursuant to Section139 of the Companies Act, 2013. The Company was required to appoint new Statutory Auditors to conduct the Statutory Audit of its books of accounts for the Financial Year 2017-18 onwards. Accordingly, the Board of Directors of the Company recommended the appointment of M/s. Price Waterhouse & Co Chartered Accountants LLP as statutory auditors of the Company for a term of 5 years commencing from the conclusion of the 110th AGM held on August 8, 2017 till the conclusion of 115th AGM to be held in 2022. The shareholder approved their appointment at the AGM held on August 8, 2017.
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(g) Details of borrowings of the Company:-
i. Details of Secured Loan Facilities as at December 31, 2019 (Rs. in Crore) Amount Principal Repayment Lender’s Type of Sanctioned/ Amount Date/ Security Name Facility Disbursed Outstanding Schedule Joint Plant Secured - 2,599 Loan is It is secured by mortgages on, Committee- repayable in all present and future Steel sixteen equal immovable properties development semiannual wherever situated and Fund installments hypothecation of movable after assets, excluding land and completion of building mortgaged in favour 4 years from of Government of India under the date of the deed of mortgage dated tranche. April 13, 1967 and in favour of Government of Bihar under two deeds of mortgage dated May 11, 1963, immovable properties and movable assets of the Tube Division, Bearing Division, Ferro Alloys Division and Cold Rolling Complex (West) at Tarapur and all investments and book debts of the Company subject to the prior charges created and/or to be created in favour of bankers for securing borrowing for working capital requirement and charges created and/or to be created on specific items of machinery and equipment procured/to be procured under deferred payment schemes/bill re-discounting schemes/asset credit schemes.
The loan is repayable in 16 equal semi-annual instalments after completion of four years from the date of the tranche.
The Company has filed a writ petition before the High Court at Kolkata in February 2006 claiming waiver of the outstanding loan and interest and refund of the balance lying with Steel Development Fund and the matter is subjudice.
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ii. Details of Unsecured Loan Facilities as on December 31, 2019 (as per IND AS)
(Rs. In Crore) Principal Amount outstanding Lender’s name/ Nature of facility/ Amount as on Repayment date / schedule Name of the Bank instrument sanctioned December 31, 2019 (₹ Crore) Credit Agricole Foreign Currency Corporate and Repayable in 5equal semi-annual Loan 54.14 Investment Bank €72mn instalments, the next instalment is due in Foreign Currency January 2020 BNP Paribas Loan 54.14 Foreign Currency AKA Bank Loan 77.00 Bayerische Foreign Currency Repayable in 5 equal semi-annual Landesbank Loan 92.00 €264mn instalments, the next instalment is due on Commerz Bank Foreign Currency April 2020 Aktiengesselschaft Loan 123.00 Foreign Currency DZ Bank AG Loan 92.00 Sumitomo Mitsui Foreign Currency Banking Loan 713.85 Corporation Repayable in 3 annual installments USD 200 Mn Export starting from February 18, 2020 Foreign Currency Development Bank Loan 713.85 Canada Standard Chartered Foreign Currency USD 7.86 Repayable on February 28, 2021 Bank Loan Mn 56.12
Foreign Currency Three equal installments in September Group of Banks USD 525 Mn Loan 1,285 2023, September 2024, September 2025
Repayable in 8 semi-annual instalments,
Other Lender Rupee Term Loan ₹2,000 Crore the next instalment is due on April 30, 1,600.00 2020.
State Bank of India ₹10,875 Repayable in 9 quarterly instalments Project Loan led consortium Crore 2,500.00 commencing from March 31, 2023
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Repayable in 10 semi-annual
Other Lender Rupee Term Loan ₹1,500 Crore instalments, the next instalment is due on 1,047.50 November 29, 2022 Repayable in 8 semi-annual instalments,
Other Lender Rupee Term Loan ₹850 Crore the next instalment is due on June 15, 584.50 2021. Repayable in 15 semi-annual
Other Lender Rupee Term Loan ₹650 Crore instalments, the next instalment is due in 637.00 February 2020. Repayable in 19 semi-annual
Other Lender Rupee Term Loan ₹1,500 Crore instalments, the next instalment is due on 1,447.50 April 16, 2020 Repayable in 16 semi-annual
Other Lender Rupee Term Loan ₹1,000 Crore instalments, the next instalment is due on 1,000.00 March 22, 2022 Repayable in 3 equal annual instalments Other Lender Rupee Term Loan ₹750 Crore 750.00 commencing from May 21, 2021 Repayable in 15 equal annual Other Lender Rupee Term Loan ₹1,000 Crore 1,000.00 instalments commencing from June 2020 Loan is repayable in 16 equal semi- Loan from SDF Loan ₹2,600 Crore annual instalments after completion of Government agency 2,600.00 four years from the date of the tranche.
*Exchange Rate as on December 31, 2019
iii. Details of Non-Convertible Debentures as on December 31, 2019
Tenor/ Period Redemption of Amount Date of date/ Credit Secured/ Series ISIN maturity Coupon issued allotment Schedule rating Unsecured 9.15% NCDs January January 24, INE081A08207 8 AA Unsecured (Series 24, 2013 2021 II) 500 2% April 23, INE081A08181 10 1500 April 23, 2022 AA Unsecured NCDs 2012 8.15% October October 1, INE081A08215 10 1000 AA Unsecured NCDs 4, 2016 2026 a) Rs. 223.35 crores will mature on December 22, 2028 10.25% b) Rs. 223.35 NCDs December INE081A08140 20 500 crores will AA Unsecured (Series 22, 2010 mature on I)** December 22, 2029 c) Rs. 223.35 crores will mature on 73
Tenor/ Period Redemption of Amount Date of date/ Credit Secured/ Series ISIN maturity Coupon issued allotment Schedule rating Unsecured December 22, 2030 #
a) Rs. 1,116.74 crores will mature on January 6, 2029 b) Rs. 10.25% 1,116.75 NCDs January 6, crores will INE081A08157 20 2500 AA Unsecured (Series 2011 mature on II)** January 6, 2030 c) Rs. 1,116.75 crores will mature on January 6, 2031 # a) Rs. 1,078.75 crores will mature on February 28, 2031 b) Rs. 1,078.25 crores will mature on March 01, 9.8359% March 1, 2032 INE081A08223 15 4315 AA Unsecured NCDs 2019 c) Rs. 1,078.25 crores will mature on March 01, 2033 d) Rs. 1,078.25 crores will mature on March 01, 2034 * Credit Rating are updated as on December 31, 2019 iv. List of top 10 debenture holders as on December 31, 2019
Number of SN Name Amount (₹) Debentures 1 Life Insurance Corporation of India 70,000 70,000,000,000 2 HDFC Trustee Company Ltd. A/C HDFC Hybrid Debt Fund 4,955 4,955,000,000 3 SBI Life Insurance Co. Ltd 3,445 3,445,000,000 4 Aditya Birla Sun Life Insurance Company Limited 3,420 3,420,000,000 5 ICICI Prudential Fixed Maturity Plan -Series 82-1135 Days 3,268 3,278,000,000 74
Plan V 6 Franklin India Credit Risk Fund 3,000 3,000,000,000 7 NPS Trust- A/C UTI Retirement Solutions Scheme C - Tier Ii 2,788 1,973,000,000 8 Kotak Credit Risk Fund 1,989 1,540,000,000 9 ICICI Prudential Life Insurance Company Limited 1,540 1,540,000,000 10 Army Group Insurance Fund 1,527 1,527,000,000
94,61,80,00,000.00 Total 95,932
* Note: The above list includes both Non-Convertible Debenture holders and Perpetual Hybrid Security holders v. The amount of corporate guarantee issued by the Issuer along with name of the counterparty on behalf of whom it has been issued as on December 31, 2019 (Rs. in crore) Sr Name of the N Purpose of the Security/ Guarantee Amount Counterparty o. Timken India Guarantee given to Commissioner of Customs on behalf of Tata 1 1.07 Ltd. Timken in respect of goods imported- Rs. 1.07 crore President of 2 Bank Guarantee against Advance License for ₹0.15 crore. 0.15 India 5 Corporate Guarantees dated 4th June, 2012, 29th June, 2012, 11th Jamshedpur August 2012, 14th August 2012 & 13th May 2013 issued in favour Continuous of The President of India, Through the Dy. Commissioner of Annealing and 3 Customs, 15/1 Strand Road, Customs House, Kolkata – 700001 177.18 Processing guaranting the performance of export obligation under the Company Private various bonds executed by Jamshedpur Continuous Annealing & Limited Processing Company Private Limited. Corporate Guarantee dated 3rd May 2013 issued in favour of Noteholders for the due and punctual re-payment of all amounts payable by the ABJA Investment Co. Pte. Ltd. (Noteholders are holders of the Notes S$300,000,000 4.95% Guaranteed Notes 1591.758* due 2023) The guarantee is capped at an amount equal to 125% of the ABJA outstanding principal amount of the Notes as detailed in “Terms 4 Investment Co. and Conditions” of the Offering Memorandum. Pte. Ltd.** Trust Deed dated 31st July 2014 for issue of U.S.$500,000,000 4.85% Guaranteed Notes due 2020 and U.S.$1,000,000,000 5.95% Guaranteed Notes due 2024 The guarantee is capped at an amount equal to 125% of the 10,707.75# outstanding principal amount of the Notes as detailed in “Terms and Conditions” of the Offering Memorandum. 12,477.908
# Guarantees given in United States Dollar, converted into INR at the rate as on December 31, 2019 i.e. 1 US $= ₹71.3850 * Guarantee given in Singapore Dollar, converted into INR at the rate as on December 31, 2019 i.e 1 S$= ₹53.0586 **Repaid Abja Bond of USD 500 Mn on January 31, 2020 vi. Details of Commercial Papers outstanding as December 31, 2019 (Rs. in crore) Name of Bank/ FI’s Amount outstanding Maturity Date 75
Aditya Birla Sunlife Mutual Rs.500 crs February 28, 2020 Fund Total vii. Details of Rest of the borrowing (if any including hybrid debt like FCCB, Optionally Convertible Debentures / Preference Shares) as on December 31, 2019
Principal Party Name Amt. Amt. (in case of Type of Repaymen Sanctioned/ Outstandi Credit Secured/ Security Facility) / Facility / t Date/ Issued ng Rating* Unsecured Instrument Instrument Schedule (Rs. Crore) (Rs. Name Crore) AA - by 11.80% CARE, Perpetual Perpetual AA – Hybrid Unsecure Hybrid 1,500 1,500 Perpetual (Positive) N.A. Securities in d Securities by the form of Brickwor NCD k AA - by 11.50% CARE, Perpetual Perpetual AA – Hybrid Unsecure Hybrid 775 775 Perpetual (Positive) N.A. Securities in d Securities by the form of Brickwor NCD k
*Credit Rating as on December 31, 2019 viii. Details of all default/s and/or delay in payment of interest and principal of any kind of term loans, debt securities and other financial indebtedness including corporate guarantees issued by the Company, in the past 5 years
The Company has never defaulted in payment of interest and principal of any kind of term loans, debt securities and other financial indebtedness including corporate guarantees issued by the Company, in the past 5 years. ix. Details of any outstanding borrowings taken/ debt securities issued where taken / issued (i) for consideration other than cash, whether in whole or part, (ii) at a premium or discount, or (iii) in pursuance of an option
Outstanding borrowings taken/ debt securities issued where taken / issued at a premium - 2.00% p.a. interest bearing 15,000 debentures of face value Rs. 10,00,000 each are redeemable at a premium of 85.03% on the face value on April 23, 2022.
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(h) Details of Promoters of the Company i. Details of Promoter and Promoter Group Holding in the Company as on December 31, 2019
Fully paid-up equity shares
% of Total shares Total No. of No. of shares shareholding pledged Sr. Name of the No. of shares equity held in as % of total with No. shareholders pledged shares demat form no of equity respect shares to shares owned Promoter
Tata Sons Private 1 34,31,42,275 34,31,42,275 30.46 13,980,000 4.07 Limited
Promoter Group
Tata Motors 2 51,41,696 51,41,696 0.46 - - Limited
Tata Investment 3 Corporation 39,27,625 39,27,625 0.35 - - Limited
Tata Chemicals 4 28,90,693 28,90,693 0.26 - - Ltd.
Ewart Investments 5 20,82,364 20,82,364 0.18 - - Limited
Rujuvalika 6 Investments 11,68,393 11,68,393 0.10 - - Limited*
Tata Industries 7 9,39,358 9,39,358 0.08 - - Limited
Tata Motors 8 5,70,188 5,70,188 0.05 - - Finance Limited
9 Tata Capital Ltd. 15,660 15,660 0.00 - -
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Titan Company 10 2,349 2,349 0.00 - - Limited
Sir Ratan Tata 11 0 0 0.00 - - Trust**
Sir Dorabji Tata 12 0 0 0.00 - - Trust**
Total 35,98,80,601 35,98,80,601 31.95 13,980,000 4.07
*11,68,393 Ordinary Shares held by Rujuvalika Investments Limited (a wholly owned subsidiary of Tata Steel Limited w.e.f May 8, 2015), do not carry any voting rights. **During the quarter ended June 30, 2018, the two Promoter Group Companies – Sir Ratan Tata Trust and Sir Dorabji Tata Trust has sold their entire holdings in Tata Steel Limited and hence, is reported as ‘0’.
Partly Paid Shares
% of Total shares Total No. of No. of shares shareholding pledged Sr. Name of the No. of shares equity held in demat as % of total with No. shareholders pledged shares form no of equity respect to shares shares owned Promoter Tata Sons Private 1 3,78,30,810 3,78,30,810 48.73 - - Limited Promoter Group Tata Motors 2 3,54,599 3,54,599 0.46 - - Limited Tata Investment 3 Corporation 2,70,869 2,70,869 0.35 - - Limited Tata Chemicals 4 1,99,358 1,99,358 0.26 - - Ltd. Ewart Investments 5 1,43,611 1,43,611 0.18 - - Limited Tata Industries 6 1,03,187 1,03,187 0.13 - - Limited Tata Motors 7 39,323 39,323 0.05 - - Finance Limited 8 Tata Capital Ltd. 1,080 1,080 0.00 - - 9 Titan Company - - 162 162 0.00 Limited Total 3,89,42,999 3,89,42,999 50.16 - -
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(i) Abridged version of latest Audited Consolidated and Standalone Financial Information (P&L statement, Balance Sheet and Cash Flow Statement) for the last three years and auditors qualifications, if any.–(As per Indian GAAP) and
(j) Abridged version of latest Audited / Limited Review Half Yearly Consolidated and Standalone Financial Information (P&L statement and Balance Sheet) and auditors qualifications, if any ( As per Ind-AS). –
Not Applicable i. Consolidated Balance Sheet for the Half Year ended September 30, 2019 and Year ended March 31,2019, March 31,2018 & March 31,2017
The Group has adopted Indian Accounting Standard (referred to as ‘Ind AS’) with effect from April 01,2016 and accordingly these financial results along with the comparatives have been prepared in accordance with the recognition and measurement principles laid down as per Ind AS 34 “Interim Financial Reporting” as prescribed under section 133 of the Companies Act, 2013 read with the relevant rules issued thereunder and the other accounting principles generally accepted in India.
Ind-AS differs in certain respects from Indian GAAP and IFRS and therefore financial statements prepared under Ind-AS may be substantially different from financial statements prepared under Indian GAAP
(Rs. In Crore) As at As at As at As at Particulars September March 31, March 31, March 31, 30, 2019 2019 2018 2017 (II) ASSETS (1) Non-current assets (a) Goodwill on consolidation 3870.28 3997.00 4099.45 3494.73 (b) Fixed assets (i)Property, Plant and Equipment 120854.09 118451.00 90322.78 86880.59 (ii)Capital work-in-progress 17359.25 17957.00 16159.80 15514.37 (iii)Right of use assets 8609.73 (iv)Other Intangible assets 2252.47 1994.00 1682.66 1631.23 (v)Intangible assets under 748.89 685.00 454.61 269.76 development 153694.71 143084.00 112719.30 107790.68 (c)Equity accounted investments 1964.59 1923.00 1781.22 1593.94 (d)Financial assets (i)Other non-current investments 1108.78 1290.00 1209.28 5190.05 (ii)Trade receivables 0.00 - - (iii)Other financial assets 1102.36 1183.00 805.25 458.64 (iv)Derivative assets 153.70 109.00 29.16 83.17 (e)Retirement benefit assets 20856.86 19964.00 20570.87 1752.64 (f)Other non-financial assets 2984.20 4655.00 2577.14 3661.99 (g)Non-current tax asset 1613.66 1575.00 1152.76 981.23 (h)Deferred tax assets 1447.60 809.00 1035.80 885.87 31231.75 31508.00 29161.48 14607.53 (2) Current assets 79
(a)Inventories 34069.74 31656.00 28331.04 24803.82 (b)Financial assets (i)Current investments 816.60 2525.00 14908.97 5673.13 (ii)Trade receivables 10836.91 11811.00 12415.52 11586.82 (iii)Cash and bank balances 3719.06 3341.00 7937.85 4921.05 (iv)Other financial assets 732.94 1488.00 867.08 612.32 (v)Derivative assets 722.64 359.00 150.95 104.04 (c)Retirement benefit assets 0.00 4.00 2.91 (d)Other non-financial assets 3630.72 3530.00 3098.09 2207.35 (e)Current tax assets 143.89 134.00 62.28 35.08 (f)Assets held for sale 3898.48 4142.00 102.47 991.42 58570.98 58990.00 67877.16 50935.03
TOTAL ASSETS 243497.44 233582.00 209757.94 173333.24 (I) EQUITY AND LIABILITIES (1) Shareholders' funds (a)Share Capital 1144.94 1144.95 1144.95 970.24 (b) Hybrid Perpetual Securities 2275.00 2275.00 2275.00 2275.00 (b)Other equity 71,883.00 67,870 58,387 71883.00
(c)Non-controlling interest 2658.73 2364.46 936.52 1601.70 75303.02 71289.55 61807.14 39421.02 (2) Non-current liabilities (a)Financial liabilities (i)Long term borrowings 86451.09 80343.00 72789.00 64022.27 (ii)Derivative liabilities 58.82 60.00 85.00 179.98 (iii)Trade payables (iv)Other financial liabilities 280.58 271.00 105.83 108.78 (b)Long term provisions 4011.74 4046.21 4338.24 4279.69 (c)Retirement benefit obligations 2873.13 2653.00 2516.56 2666.27 (d)Deferred income 620.09 907.00 1526.58 2057.59 (e)Other non-financial liabilities 630.08 519.00 358.16 226.51 (f)Non-current tax liabilities (g)Deferred tax liabilities 9109.62 12460.00 10569.88 10030.08 104035.15 101259.21 92289.25 83571.17 (7) Current liabilities (a)Financial liabilities (i)Short term borrowings 16294.54 10802.00 15884.98 18328.10 (ii)Derivative liabilities 243.34 417.00 468.79 673.67 (iii)Trade payables 19912.44 21717.00 20413.81 18574.46 (iv)Other financial liabilities 15866.95 16738.00 9791.78 6315.51 (b)Short term provisions 1406.34 1248.72 1269.64 987.38 (c)Retirement benefit obligations 143.09 121.00 110.36 95.20 (d)Deferred income 28.24 17.00 6.21 22.52
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(e)Other non-financial liabilities 7396.62 7912.00 6932.26 4315.27 (f)Current tax liabilities 1068.41 636.00 783.47 739.18 (g)Liabilities held for sale 1799.30 1426.00 0.11 289.76 64159.27 61034.72 55661.41 50341.05 TOTAL EQUITY AND LIABILITIES 243497.44 233582.00 209757.94 173333.24
ii. Consolidated Statement of Profit and Loss for the nine months ended December 31, 2019 and year ended March 31,2019 , March 31,2018 & March 31,2017 ( Ind AS) (Rs. in Crore) For nine For the year For the For the year months ended year ended ended Particulars ended March 31, March 31, March 31, December 2019 2018 2017 31, 2019 (1) REVENUE (a)Revenue from operations 106,046.70 157,668.99 124,109.69 117,419.94 (b)Other Income 527.58 1,420.58 881.10 527.47 Total Revenue [1(a) + 1(b)] 106,574.28 159,089.57 124,990.79 117,947.41 (2) EXPENSES (a)Raw materials consumed 41,017.41 54,309.00 40,762.00 32,418.09 (b)Purchases of finished, semi- 3,726.92 6,568.00 5,375.00 11,424.94 finished and other products (c)Changes in stock of finished goods, work-in-progress and stock- 975.23 (97.00) 99.00 (4,538.13) in-trade (d)Employee benefit expense 13,798.58 18,759.00 16,970.00 17,252.22 (e)Depreciation and amortisation 5,608.38 7,342.00 5,742.00 5,672.88 expense (f)Finance costs 6,216.61 7,660.00 5,455.00 5,072.20 (g)Other expenses 33,712.36 50,410.00 40,471.00 44,619.71 105,055.49 144,951.00 114,874.00 111,921.91 Total Expenses 105,055.49 143,287.00 113,873.00 111,157.20 Share of profit / (loss) of joint 95.14 224.70 239.00 7.65 ventures and associates (3) Profit/(loss) before exceptional 1,613.93 16,027.27 11,356.79 6,797.86 items and tax [1 - 2] (4) Exceptional items (346.20) (121.00) 9,599.00 (4,324.23) (a)Profit / (Loss)on sale of non- 148.99 180.00 22.70 current investments (b)Provision for diminution in value 1.07 (172.00) (27.00) (125.45) of investments (c)Provision for impairment of non- (55.71) (10.00) (903.00) (267.93) current assets (d) Profit on sale of non-current 85.87 assets (e) Provision for demands and claims (192.24) (329.00) (3,214.00) (218.25) (f) Employee Separation (106.33) (35.00) (108.00) (207.37) Compensation (g) Restructuring and other provision (163.93) 245.00 13,851.00 (3,613.80)
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(h) Fair value gain/(loss) on 21.95 preference share investments (net)
(5) Profit/(loss) before tax [3 + 4] 1,267.73 15,906.27 20,955.79 2,473.63 (6) Tax expense/(credit) (2,305.13) 6,718.00 3,392.00 2,778.01 (7) Profit/(loss) after tax [5 - 6] 3,572.86 9,188.27 17,563.79 (304.38) (8)Profit/(loss) after tax from (785.05) (89.00) 199.00 (3,864.00) discontinued operations (9) Minority Interest (250.07) (1,120.00) 4,328.00 72.23 (10) Profit/(loss) for the period [7 + 3,037.88 10,219.27 13,434.79 (4,240.61) 8 - 9]
iii. Consolidated Cash Flow statement for the Half Year ended September 30, 2019 and Year ended March 31,2019, March 31,2018 & March 31,2017
For the For the year For the year For the year half year ended ended ended ended Particulars March 31, March 31, March 31, September 2019 2018 2017 30, 2019 (Audited) (Audited) (Audited) (Audited) A.Cash Flow from Operating Activities: Profit/(Loss) before tax 1093.15 15807.00 21168.20 (1382.55) Adjustments for: Depreciation & amortization expense 4333.83 7579.00 5961.66 5689.77 Income from non-current investments (20.97) (26.00) (68.25) (57.17) (Profit)/Loss on sale of non-current (0.97) investments (Profit)/Loss on assets sold/discarded 10.12 (266.00) 49.29 (0.15) Provision for diminution in value of investments Provision for impairment of non- current assets Interest and income from current (227.56) (1038.00) (929.15) (517.62) investments Finance costs 3719.61 7742.00 5501.79 5072.20 (Gain)/Loss on cancellation of (14.24) (37.00) 79.33 67.95 forwards, swaps and options Exchange (gain)/loss on revaluation of 1539.11 (1151.00) (1376.77) 1422.50 foreign currency loans and swaps (Profit)/Loss on disposal of - (5.15) 3085.32 discontinued operation Share of profit or loss of joint ventures (74.66) (222.00) (174.10) (7.65) and associates Other non-cash expenditure 211.16 (684.45) (420.59) (114.42) Exceptional (income) / expenditure 17.56 136.00 (9599.12) 4324.23 Operating Profit before Working 10587.11 27839.55 20187.14 17581.44 Capital Changes Adjustments for: Trade and other receivables 1347.17 (115.00) (208.94) (548.00) Inventories (2311.61) (1069.00) (1595.43) (8243.17) Trade Payables and other liabilities (2691.06) 3774.00 (7471.16) 3876.75 82
(3655.50) 2590.00 (9275.53) (4914.42) Cash Generated from Operations 6931.61 30429.55 10911.61 12667.02 Direct tax paid (825.31) (5094.00) (2888.22) (1842.66) Net Cash Flow from/(used in) 6106.30 25335.55 8023.39 10824.36 Operating Activities B.Cash Flow from Investing Activities: Purchase of fixed assets(1) (4984.77) (9091.00) (7478.50) (7715.64) Sale of fixed assets 101.83 467.00 179.05 288.72 Purchase of non-current investments (17.85) (490.00) (85.67) (168.73) Acquisition of subsidiaries/joint (4433.17) (35282.00) (255.00) ventures/undertakings Disposal of subsidiaries/joint 356.91 179.00 34.22 (1081.36) ventures/undertakings Sale of non-current investments 112.18 463.00 3898.74 91.24 Asset held for Sale Fixed/restricted deposits with banks (225.12) 418.00 (85.33) (27.22) (placed)/realized (Purchase)/sale of current investments 1776.68 13093.00 (8555.08) (692.63) (net) Inter-corporate deposits (net) (1.16) 18.39 (43.66) 4.48 Interest income received 132.64 175.43 254.50 140.12 Dividend received 82.06 148.34 111.10 85.43 Principal receipts under sublease 29.20 Net Cash flow from/(used in) (7070.57) (29900.84) (12025.63) (9075.59) Investing Activities C.Cash Flow from Financing Activities: Issue of equity shares 188.30 (6.03) 9087.23 0.01 Issue/(Redemption) of Preference Shares Capital contributions received Contributions received from minority 651.89 Proceeds from borrowings 14718.88 42763.90 24161.36 19484.55 Repayment of borrowings (8031.62) (34522.72) (19936.13) (16602.29) Amount received/(paid) on cancellation of forwards, swaps and (64.56) (66.64) (79.86) (165.11) options Distribution on Hybrid Perpetual (133.42) (265.39) (267.10) (265.70) Securities Expenses (incurred)/reimbursed on issue of equity instruments Interest paid(1) (3318.01) (7151.93) (5145.57) (4732.80) Dividend paid (1506.55) (1186.20) (982.35) (791.32) Tax on dividend paid (308.67) (237.69) (197.64) (158.52) Payment of lease obligations (486.46) Net Cash Flow from/(used in) 1057.89 (672.70) 6639.94 (2579.29) Financing Activities Net Increase/(decrease) in Cash and 93.62 (5237.99) 2637.70 (830.52) Cash Equivalents Opening Cash and Cash Equivalents 3270.30 8180.00 4850.48 6076.94 Effect of exchange rate on (10.79) 34.00 295.32 (414.06) translation of foreign currency Cash and Cash Equivalent balances 3353.13 2976.01 7783.50 4832.36
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Closing Cash and Cash Equivalents 3353.13 2975.53 7783.50 4832.29 iv. Standalone Balance Sheet for the half year ended September 30, 2019 and year ended March 31,2019, March 31,2018 and as at March 31, 2017 ( Ind-AS) (Rs. in Crore) As at As at March As at March As at March Particulars September 31, 2019 31, 2018 31, 2017 30, 2019 Audited Audited Audited Audited A ASSETS (1) Non-current assets Property, plant and (a) 67,447.83 70,416.82 70,942.90 71,778.97 equipment (b) Capital work-in-progress 6,415.39 5,686.02 5,641.50 6,125.35 (c) Right of use assets 4,059.32 0.00 0.00 0.00 (d) Intangible assets 764.90 805.20 786.18 788.18 Intangible assets under (e) 144.44 110.27 31.77 38.61 development Investments in (f) subsidiaries, associates 5,962.22 4,437.76 3,666.24 3,397.83 and joint ventures (g) Financial assets Non-current (i) 34,457.65 34,491.49 5,970.32 4,958.07 investments Other financial (ii) 315.67 550.86 246.84 291.58 assets (h) Other non-current assets 1,883.72 2,535.98 2,140.84 3,108.67 (i) Non Current tax assets 1,461.54 1,428.38 1,043.84 867.75 Sub-total - Non current assets 122,912.68 120,462.78 90,470.43 91,355.01 (2) Current assets (a) Inventories 11,821.49 11,255.34 11,023.41 10,236.85 (b) Financial assets Current (i) 0.09 477.47 14,640.37 5,309.81 Investments (ii) Trade receivables 1,405.96 1,363.04 1,875.63 2,006.52 Cash and cash (iii) 1,467.91 544.85 4,588.89 905.21 equivalents Other balances (iv) 282.09 173.26 107.85 65.10 with banks Other financial (v) 654.10 1,011.64 595.71 348.46 assets (c) Other current assets 2,138.12 2,209.98 1,812.05 1,238.45 Sub-total - 17,769.76 17,035.58 34,643.91 20,110.40 Current assets TOTAL - ASSETS 140,682.44 137,498.36 125,114.34 111,465.41
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EQUITY AND B LIABILITIES (1) Equity (a) Equity share capital 1,146.12 1,146.12 1,146.12 971.41 Hybrid perpetual (b) 2,275.00 2,275.00 2,275.00 2,275.00 securities (c) Other equity 72,670.82 69,308.59 60,368.72 48,687.60 Sub-total - Total Equity 76,091.94 72,729.71 63,789.84 51,934.01 (2) Non-current liabilities (a) Financial liabilities Long term (i) 28,724.90 26,651.19 24,568.95 24,694.37 borrowings Other financial (ii) 225.69 184.89 89.86 197.55 liabilities (b) Long term provisions 1,902.89 1,918.18 1,961.21 2,024.74 Retirement benefit (c) 1,540.91 1,430.35 1,247.73 1,484.21 obligations Other non-current (d) 1,026.41 1,183.39 1,590.32 1,962.93 liabilities (e) Deferred tax liabilities 5,621.04 7,807.00 6,259.09 6,111.27 Sub-total - Non current liabilities 39,041.84 39,175.00 35,717.16 36,475.07 (3) Current liabilities (a) Financial liabilities Short term (i) 1,507.10 8.09 669.88 3,239.67 borrowings (ii) Trade payables 11,008.30 10,969.56 11,242.75 10,717.44 Other financial (iii) 5,221.19 7,011.92 6,557.81 4,332.52 liabilities (b) Short term provisions 692.74 778.23 735.28 700.60 Retirement benefit (c) 99.12 102.12 90.50 56.58 obligations (d) Other current liabilities 6,263.53 6,365.59 5,857.06 3,543.80 (e) Current tax liabilities 756.68 358.14 454.06 465.72 Sub-total - Current liabilities 25,548.66 25,593.65 25,607.34 23,056.33 TOTAL - EQUITY AND 140,682.44 137,498.36 125,114.34 111,465.41 LIABILITIES
v. Standalone Statement of Profit and Loss for the nine months ended 31st December, 2019, year ended March 31,2019, March 31,2018 and March 31,2017 ( Ind AS)
Nine Financial Financial Financial months year year year Particulars ended on ended on ended on ended on December March 31, March 31, March 31, 31, 2019 2019 2018 2017 1 Revenue from operations
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a) Gross sales / income from operations 45,116.67 68,923.36 59,305.08 52,564.93 b) Other operating income 1,107.87 1,687.56 1,214.29 696.03 Total revenue from operations [ 1(a) + 46,224.54 70,610.92 60,519.37 53,260.96 1(b) ] 2 Other income 332.76 2,405.08 763.66 414.46 3 Total income [ 1 + 2 ] 46,557.30 73,016.00 61,283.03 53,675.42 4 Expenses a) Raw materials consumed 13,472.56 19,840.29 16,877.63 12,496.78 Purchases of finished, semi-finished b) 1,159.84 1,807.85 647.21 881.18 steel & other products Changes in inventories of finished c) goods, work-in-progress and stock- 415.66 (554.33) 545.36 (1,329.65) in-trade d) Employee benefits expense 3,665.79 5,131.06 4,828.85 4,605.13 e) Finance costs 2,227.01 2,823.58 2,810.62 2,688.55 Depreciation and amortisation f) 2,917.86 3,802.96 3,727.46 3,541.55 expense g) Excise duty 0.00 0.00 1,358.58 5,117.18 g) Other expenses 16,297.80 23,823.11 20,482.78 19,614.39 Total expenses [ 4(a) to 4(g) ] 40,156.52 56,674.52 51,278.49 47,615.11 Profit / (Loss) before exceptional items 5 6,400.78 16,341.48 10,004.54 6,060.31 & tax [ 3 - 4 ] 6 Exceptional items : Profit / (Loss) on sale of non current a) 0.00 262.28 0.00 investments Provision for impairment of b) (7.73) (12.53) (62.92) (170.87) investments / doubtful advances c) Restructuring and other provisions 0.00 0.00 (135.58) d) Provision for demands and claims (192.24) (328.64) (3,213.68) (218.25) e) Employee separation compensation (106.33) (35.34) (89.69) (178.68) Fair value gain/(loss) on preference f) 612.20 shares investments (net) Total exceptional items [ 6(a) to 6(f) ] 305.90 (114.23) (3,366.29) (703.38) 7 Profit / (Loss) before tax [ 5 + 6 ] 6,706.68 16,227.25 6,638.25 5,356.93 8 Tax Expense a) Current tax 1,279.28 6,297.11 1,586.78 1,400.54 b) Deferred tax (1,753.23) (603.05) 881.92 511.84 Total tax expense [ 8(a) + 8(b) ] (473.95) 5,694.06 2,468.70 1,912.38 Net Profit / (Loss) for the period [ 7 - 8 9 7,180.63 10,533.19 4,169.55 3,444.55 ] 10 Other comprehensive income Items that will not be A (i) (197.22) (40.68) 14.63 601.22 reclassified to profit or loss
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Income tax relating to items (ii) that will not be reclassified to 27.50 (2.63) (82.24) 75.37 profit or loss Items that will be reclassified B (i) 7.23 (10.62) 9.96 (1.22) to profit or loss Income tax relating to items (ii) that will be reclassified to (1.82) 3.71 (3.47) 0.42 profit or loss Total other comprehensive income (164.31) (50.22) (61.12) 675.79 Total Comprehensive Income for the 11 7,016.32 10,482.97 4,108.43 4,120.34 period [ 9 + 10 ] Paid-up equity share capital [Face value ₹ 12 1,146.13 1,146.12 1,146.12 971.41 10 per share] 13 Paid-up debt capital 14,346.41 10,345.79 10,175.70 13 Reserves excluding revaluation reserves 69,308.59 60,368.72 48,687.60 14 Hybrid perpetual securities 2,275.00 2,275.00 2,275.00 15 Debenture redemption reserve 2,046.00 2,046.00 2,046.00 14 Earnings per equity share Basic earnings per share (not annualised) - in Rupees 61.35 90.41 38.57 31.74 (after exceptional items) Diluted earnings per share (not annualised) - in Rupees 61.35 90.40 38.56 31.74 (after exceptional items) 18 Net Debt Equity Ratio 0.42 0.15 0.44 19 Debt Service Coverage Ratio 6.23 5.73 2.72 20 Interest Service Coverage Ratio 9.57 7.03 4.21
vi. Standalone Cash Flow statement for the half year ended 30 September 2019, and year ended 31 March 2019, 31 March 2018 and 31 March 2017 (Rs. in Crore) Six months ended on Year ended on Year ended on Particulars 30.09.2019 31.03.2019 31.03.2018
Cash flows from (A) operating activities: Profit before tax 4,291.94 16,227.25 6,638.25 Adjustments for: Depreciation and 1,937.99 3,802.96 3,727.46 amortization expense Dividend income (87.23) (96.25) (88.57) (Gain)/loss on sale of property, plant and equipment including 4.94 1.42 40.48 intangible assets (net of loss on assets scrapped/written off)
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Exceptional 43.33 114.23 3,366.29 (income)/expenses (Gain)/loss on cancellation of (14.24) (36.95) 79.33 forwards, swaps and options Interest income and income from current (73.31) (2,273.30) (788.38) investments and guarantees Finance costs 1,443.14 2,823.58 2,810.62 Foreign exchange 10.33 (1.27) (88.17) (gain)/loss Other non-cash items (382.03) (612.79) (588.33) 2,882.92 3,721.63 8,470.73 Operating profit before changes in 7,174.86 19,948.88 15,108.98 non-current/current assets and liabilities Adjustments for: Non-current/current financial and other 326.55 (611.22) 456.70 assets Inventories (562.31) (214.60) (784.63) Non-current/current financial and other 42.45 602.59 (487.09) liabilities/provisions (193.31) (223.23) (815.02) Cash generated from 6,981.55 19,725.65 14,293.96 operations Income taxes paid (683.16) (4,532.54) (2,502.51) Net cash from/(used in) operating 6,298.39 15,193.11 11,791.45 activities
Cash flows from (B) investing activities: Purchase of capital (1,954.52) (3,679.86) (2,527.46) assets Sale of capital assets 6.13 18.94 13.28 Purchase of investments in (1,301.20) (29,076.49) (5,018.88) subsidiaries Purchase of other non- (17.85) (403.02) current investments Sale of other non- - 306.63 3,877.78 current investments (Purchase)/sale of current investments 517.32 14,759.69 (8,650.92) (net)
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Loans given - (18,908.41) (622.68) Repayment of loans 1.75 18,914.72 487.61 given Fixed/restricted deposits with banks (110.28) (78.29) (13.32) (placed)/realised Interest and guarantee 80.37 1,699.86 92.67 commission received Dividend received 34.89 39.38 30.31 from subsidiaries Dividend received from associates and 34.20 38.62 41.06 joint ventures Dividend received 18.14 18.25 17.20 from others Net cash from/(used in) investing (2,691.05) (16,349.98) (12,273.35) activities
Cash flows from (C) financing activities: Proceeds from issue of equity shares (net - (6.03) 9,087.23 of issue expenses) Proceeds from 2,816.26 5,884.67 2,343.84 borrowings Payment of (2,266.02) (4,448.06) (2,850.24) borrowings Payment of lease (132.15) (89.25) (108.14) obligations Amount received/(paid) on (2.49) 15.55 (110.72) utilisation/cancellation of derivatives Distribution on hybrid (133.42) (265.39) (267.10) perpetual securities Interest paid (1,179.09) (2,607.88) (2,769.66) Dividend paid (1,489.66) (1,145.92) (971.22) Tax on dividend paid (297.71) (224.86) (188.41) Net cash from/(used in) financing (2,684.28) (2,887.17) 4,165.58 activities Net increase/(decrease) 923.06 (4,044.04) 3,683.68 in cash and cash equivalents Opening cash and 544.85 4,588.89 905.21 cash equivalents Closing cash and 1,467.91 544.85 4,588.89 cash equivalents
(k) Any material event/ development or change having implications on the financials/credit quality (e.g.
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any material regulatory proceedings against the Issuer/promoters, tax litigations resulting in material liabilities, corporate restructuring event etc.) at the time of issue which may affect the issue or the investor’s decision to invest / continue to invest in the debt securities.
No material event/ development or change has occurred between March 31, 2019 and date of Issue which may affect the Issue or the Debenture holders’ decision to invest / continue to invest in the debt securities.
(l) The names of the debenture trustee(s) shall be mentioned with statement to the effect that debenture trustee(s) has given his consent to the Issuer for his appointment under regulation 4 (4) and in all the subsequent periodical communications sent to the holders of debt securities.
IDBI Trusteeship Services Limited has been appointed as Debenture Trustee for the proposed Issue. The Debenture Trustee has given their consent to the Issuer for its appointment and a copy of the consent letter is enclosed as Annexure 1 to this Disclosure Document. The Company has entered into a Trusteeship Agreement dated March 9, 2020 on or about the date hereof with the Debenture Trustee and shall enter into a Debenture Trust Deed with the Debenture Trustee, as required under applicable laws, inter-alia, specifying the powers, authorities and obligations of the Company and the Debenture Trustee in respect of the Debentures.
The Debenture holders shall, by signing the Application Form and without any further act or deed, be deemed to have irrevocably given their consent to and authorised the Debenture Trustee or any of their Agents or authorised officials to do, inter alia, all such acts, deeds and things necessary in respect of or relating to the security to be created for securing the Debentures being offered in terms of this Disclosure Document. All rights and remedies under the Debenture Trust Deed and Trusteeship Agreement and/or other documents shall rest in and be exercised by the Debenture Trustee without having it referred to the Debenture holders. Any payment made by the Company to the Debenture Trustee on behalf of the Debenture holder(s) shall discharge the Company pro tanto to the Debenture holder(s). No Debenture holder shall be entitled to proceed directly against the Company unless the Debenture Trustee, having become so bound to proceed, fails to do so.
The Debenture Trustee will protect the interest of the Debenture holders in the event of default by the Company in regard to timely payment of interest and Redemption Amount.
(m) Credit Rating of Debentures
India Ratings And Research Private Limited (India Ratings) has assigned “Ind AA” and Credit Analysis & Research Limited (CARE Ratings) has assigned “CARE AA” (pronounced as Double A) for the issue of Debentures This indicates “Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations”. Such instruments carry very low credit risk with respect to timely payment of interest and principal on the instrument. The rating is not a recommendation to buy, sell or hold Debentures and investors should take their own decision. The rating may be subject to suspension, revision or withdrawal at any time by the assigning Credit Rating Agency. The Credit Rating Agency has a right to revise, suspend or withdraw the rating at any time on the basis of factors such as new information or unavailability of information or other circumstances which the Credit Rating Agency believes may have an impact on its rating.
The rating letter as released by Credit Rating Agencies are attached as Annexure 2A and Annexure 2B to this document.
(n) Guarantee or comfort for the Debentures
The Debentures are not backed by any guarantee or letter of comfort or any other document / letter with similar intent by any party.
(o) Consent from Debenture Trustee
Copy of consent letter from the Debenture Trustee IDBI Trusteeship Services Limited is attached as Annexure
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(p) Listing of Debentures
The Debentures are proposed to be listed on the Wholesale Debt Market (WDM) segment of BSE, (“Designated Stock Exchange”). The Company has obtained In-principle approval from BSE.
(q) Other Details
i. DRR creation- relevant regulations and applicability
In accordance with Section 71 of the Act and applicable rules and notifications thereafter, the Company would not be crediting/transferring any amount to the DRR in respect of the proposed Debenture issue.
ii. Issue/ instrument specific regulations – relevant details 1) Companies Act, 2013 and the rules and regulations framed thereunder. 2) Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008(as amended from time to time). 3) SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015(as amended from time to time).
Governing Law and Provisions
The Debentures offered are subject to provisions of the Companies Act, 2013, Securities Contract Regulation Act, 1956, terms of this Disclosure Document, instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trusteeship Agreement and / or Debenture Trust Deed. Over and above such terms and conditions, the Debentures shall also be subject to the applicable provisions of the Depositories Act, 2018 and the laws as applicable, guidelines, notifications and regulations relating to the allotment and issue of capital and listing of securities issued from time to time by Securities and Exchange Board of India (SEBI), concerned Stock Exchange or any other authorities and other documents that may be executed in respect of the Debentures.
Application Process
Please refer to the section titled Application Procedure on page 99 of this Information Memorandum for further details.
Particulars of the dates of, and parties to all material contracts, agreements involving financial obligations of the Issuer
Material Contracts - By very nature and volume of its business, the Company is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of the Company. However, the contracts referred to in Para A below (not being contracts entered into in the ordinary course of the business carried on by the Company) which are or may be deemed to be material have been entered into by the Company. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the Registered Office of the Company between 10.00 a.m. and 12.00 noon on any working day until the Issue Closing Date.
Para A:
▪ Letter appointing TSR Darashaw Limited as Registrars and Transfer Agents (“Registrar”). ▪ Letter appointing IDBI Trusteeship Services Limited, as trustee for the benefit of the Debenture holders (“Debenture Trustee”). ▪ Trusteeship Agreement
Para B:
▪ Memorandum and Articles of Association of the Company. 91
▪ Resolution of the Board of Directors dated August 13, 2018 authorising issue of Debentures offered under terms of this Disclosure Document. ▪ Consent letter from IDBI Trusteeship Services Limited for acting as Debenture Trustee for and on behalf of the Debenture holders. ▪ Consent letter from TSR Darashaw Limited for acting as Registrars to the Issue. ▪ Application made to BSE Limited for grant of in-principle approval for listing of Debentures. ▪ Letter from BSE Limited conveying its in-principle approval for listing of Debentures. ▪ Letter from India Ratings And Research Private Limited (India Ratings) and Credit Analysis & Research Limited (CARE Ratings) for the issue of Debentures conveying the credit rating for the Debentures of the Company. ▪ Trusteeship Agreement dated March 9, 2020 entered into between IDBI Trusteeship Services Limited and the Company. ▪ Tripartite Agreement between the Company, National Securities Depository Limited (“NSDL”) and the Registrar for the Issue of Debentures in dematerialised form. ▪ Tripartite Agreement between the Company, Central Depository Services (India) Limited (“CDSL”) and the Registrar for the Issue of Debentures in dematerialised form. ▪ Annual Reports of the Company for last three years. ▪ Auditor’s Report in respect of the financial statements of the Company for last three years.
Issue Size and Nature of Instrument
The Company proposes to issue 6,700 [●]% Coupon, Unsecured, Redeemable, Rated, Listed, Non-Convertible Debentures with a Face Value of Rs.10,00,000 each aggregating to Rs. 670 crores (“Issue Size”), by way of a Private Placement. For Details of the issue, please refer “Issue Details” in this Disclosure Document.
Details of utilisation of Issue proceeds
The proceeds of the issue will be used in accordance with applicable laws for general business purpose including long term working capital requirements, capital expenditure and repayment/prepayment of existing loans. The proceeds will, however, not be used for investments in equity/capital market, speculative activity, acquisition of land, real estate purpose, acquisitions and on-lending.
Face Value, Issue Price, Effective Yield for Investor
Each Debenture has a face value of Rs.10,00,000 and is issued at par i.e. for Rs.10,00,000. Since there is no premium or discount on either issue price or on redemption value of the Debenture, the effective yield for the investors held to maturity is same as the coupon rate on the Debentures (“Coupon Rate”).
Minimum Subscription
As the current issue of Debentures is being made on private placement basis, the requirement of minimum subscription shall not be applicable and therefore the Company shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of Issue Size or certain percentage of Issue Size.
Deemed Date of Allotment
All the benefits under the Debentures, including but not limited to the payment of Coupon, will accrue to the Investor from the deemed date of allotment. The deemed date of allotment for the Issue is March 13, 2020.
Date of Allotment
The Date of Allotment shall be within 5 days from the Deemed Date of Allotment. The Company shall allot the Debentures and issue and credit the letter of allotment in relation to the Debentures in the beneficiary account of the investor(s) with NSDL / CDSL / Depository Participant (“Beneficiary Account”).
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Depository Arrangements
The Company has appointed TSR Darashaw Limited, as the Registrar for the Issue. The Company has made necessary depository arrangements with NSDL and CDSL for the Issue and holding of Debentures in the dematerialised form by investors. In this context, the Company has signed tripartite agreements as under:
a. Tripartite Agreement dated November 6, 1996 between the Company, the Registrar and NSDL for offering Depository option to the investors. b. Tripartite Agreement dated September 22, 1999 between the Company, the Registrar and CDSL for offering Depository option to the investors.
Listing
The Debentures are proposed to be listed on the Wholesale Debt Market (WDM) segment of BSE Limited. The Company shall comply with the requirements of the Listing Regulations, to the extent applicable to it, on a continuous basis.
Coupon Rate
The Coupon Rate on the Debentures is [●] per annum payable annually.
Security
Unsecured
Security Creation
Not applicable, as the Debentures are unsecured.
Permission from the prior creditors for creation of paripassu charge
Not applicable
Market Lot
Not applicable
Interest on Application Money
Interest on Application Money at the Coupon Rate (subject to deduction of tax at source at the rate prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re- enactment thereof) will be paid to the applicants. Such interest shall be paid from the date of receipt of money by the Company up to the date immediately preceding the Deemed Date of Allotment and shall be sent /paid along with the letter(s) of allotment/ intimation of allotment. Payment of interest will be made by way of Cheque / DD / RTGS / NEFT / Electronic mode in the name of the respective applicant. No Interest on Application Money shall be paid to the applicants whose applications are rejected. In the case of applicants whose applications are accepted in part, no interest shall be paid on the portion of the application money refunded to them.
Debentures in Dematerialized Form
The Company is issuing the Debentures only in dematerialized form and hence no Debentures are being issued in physical form in terms of the Disclosure Document. The Company has entered in to Depository Arrangements with NSDL and CDSL for dematerialization of the Securities.
Applicants have to mention their Depository Participant’s name, DP-ID and Beneficiary Account Number/Client ID in the appropriate place in the Application Form. Debentures of successful allottee(s) having Depository 93
Account shall be credited to their Depository Account.
Coupon, Redemption Amount or other benefits with respect to the Debentures would be paid to those Debenture holders whose names appear on the list given by the Depository to the Issuer at the close of the Record Date.
Undertaking- Common Form of Transfer
The Debentures shall be transferred subject to and in accordance with the rules and procedures as prescribed by the NSDL / CDSL / Depository Participant of the transferor / transferee and any other applicable laws and rules notified in respect thereof.
The normal procedure followed for transfer of securities held in the dematerialized form shall be followed for transfer of the Debentures, issued in terms of the Disclosure Document and held in electronic form. The seller should give delivery instructions containing details of the buyer’s depository account to his Depository Participant.
The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid / redemption will be made to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Company.
The Company is issuing the Debentures only in the dematerialized form and hence there is no physical holding of the Debentures being issued in terms of the Disclosure Document. The Company undertakes that it shall use a common form / procedure for transfer of the Debentures issued under the terms of the Disclosure Document, if at a later stage there is some holding in the physical form due to the Depository giving re-materialization option to any investor.
Joint-Holders
Where two or more persons are holders of any Debenture(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship in the same manner and to the same extent and be subject to the same restrictions and limitations as in the case of the existing equity shares of the Company, subject to other provisions contained in the Articles of Association of the Company.
Mode of Transfer
The Debentures shall be transferable and transmittable in the same manner and to the same extent and be subject to the same restrictions and limitations as in the case of the existing equity shares of the Company. The provisions relating to transfer and transmission, nomination and other related matters in respect of equity shares of the Company, contained in the Articles of Association of the Company, shall apply mutatis mutandis to the transfer and transmission of the Debentures and nomination in this respect.
Succession
In the event of demise of the sole holder of the Debentures, the Company will recognize the executor or administrator of the deceased Debenture holder, or the holder of succession certificate or other legal representative as having title to the Debentures. The Company shall not be bound to recognize such executor, administrator or holder of the succession certificate, unless such executor or administrator obtains probate or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Directors of the Company may, in their absolute discretion, where they think fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Debentures standing in the name of the deceased Debenture holder on production of sufficient documentary proof and / or indemnity.
Record Date 94
The Record date for the Debentures shall be 15 days prior to the date of each of the Coupon Payment Date and/or the Redemption Date, as the case may be (“Record Date”).
In case the Record Date falls on non-Business Day, the Business Day prior to the said non-Business Day will be considered as the Record Date.
Coupon and/or Redemption Amount shall be paid to the person whose name appears as sole / first in the register of Debenture holders at the close of the Record Date. In the event of the Company not receiving any notice of transfer at least 15 days before the respective due date of payment of interest and at least 15 days prior to the Redemption Date, as the case may be, the transferees of the Debentures shall not have any claim against the Company in respect of interest and/or Redemption Amount so paid to the registered Debenture holders.
In case of those Debentures for which the beneficial owner is not identified by the Depository at the close of the Record Date, the Company would keep in abeyance the payment of interest or other benefits, till such time that the beneficial owner is identified by the Depository and conveyed to the Company, whereupon the interest or benefits will be paid to the beneficiaries, as identified, within a period of 30 days from the date of such notification by the Depository.
List of Debenture holders / Beneficiaries
The Company shall request the Depository to provide a list of Debenture holders at the close of the Record Date. This shall be the list, which shall be considered for payment of Coupon or Redemption Amount, as the case may be.
Interest on Debentures
The Debentures shall carry interest at Coupon Rate (subject to deduction of tax at source at the rates prevailing from time to time under the provisions of the Income Tax Act, 1961, or any other statutory modification or re- enactment thereof). The interest shall be payable at Coupon Payment Date annually through the Tenor of the Debentures.
Interest on Debentures will be paid to the Debenture holders as per the beneficiary list provided by the Depository at the close of the Record Date.
Payment will be made by way of Cheque / DD / RTGS / NEFT / Electronic mode and any other prevailing mode of payment from time to time in the name of Debenture Holder(s) whose names appear on the list given by the Depository to the Company at the close of the Record Date. Cheque / DD will be dispatched to the Debenture holder(s) by Courier / Registered Post / Hand Delivery, in accordance with the existing rules / laws at the sole risk of the Debenture holder(s) to the sole holder(s) / first named holder(s) at the address registered with the Company.
The Coupon in all cases shall be payable on the amount of outstanding Debentures on an Actual/Actual basis, i.e., Actual number of days elapsed divided by the actual number of days in the year and rounded off to the nearest Rupee.
If any of the Coupon Payment Date is not a Business Day, interest will be payable on the next succeeding Business Day. Such payment on the next Business Day would not constitute non-payment on due date and no additional interest or compensation will be paid for such day(s).
Deduction of Tax at Source (TDS)
Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source on payment of interest or any other sums payable in respect of the Debentures. For seeking TDS exemption/lower rate of TDS, relevant certificate(s)/ document(s) must be lodged at least 15 days before the Coupon Payment Date (s) with the Registrar or to such other person(s) at such other address (es) as the 95
Company may specify from time to time through suitable communication.
Tax exemption certificate/ declaration of non-deduction of tax at source on Interest on Application Money, should be submitted along with the Application Form. Where any deduction of Income Tax is made at source, the Company shall send to the Debenture holder(s) a Certificate of Tax Deduction at Source.
Regarding deduction of tax at source and the requisite declaration forms to be submitted, prospective investors are advised to consult their own tax consultant(s).
With effect from June 1, 2008 under section 193 of the Income-tax Act, 1961, no tax is deductible at source from the amount of interest payable on any security issued by a Company in dematerialized form and listed on a recognized stock exchange in India in accordance with the Securities Contract (Regulation) Act, 1956 and the rules made thereunder, held by a person resident in India. Since the Debentures shall be issued in dematerialized mode and are proposed to be listed on BSE, no tax will be deductible at source on the payment or credit of interest on the Debentures held by any person resident in India.
Payment on Redemption
The Debentures shall be redeemed at par as a bullet repayment at the end of five years from the Deemed Date of Allotment (“Redemption Dates”), as mentioned in the Issue Details.
The Debentures will not carry any obligation, for interest or otherwise, after the Redemption Date. The Debentures held in the dematerialised form shall be taken as discharged on payment of the Redemption Amount by the Company on Redemption Date to the registered Debenture holders whose name appear in the list given by the Depository to the Company at the close of the Record Date. Such payment will be a legal discharge of the liability of the Company towards the Debenture holders.
Payment of Redemption Amount will be made by way of Cheque / DD / RTGS / NEFT / Electronic mode and any other prevailing mode of payment in the name of Debenture Holder(s) whose name appears on the list given by the Depository to the Company at the close of the Record Date. Cheque / DD will be dispatched to the Debenture holder(s) by Courier / Registered Post / Hand Delivery, in accordance with the existing rules / laws at the sole risk of the Debenture holder(s) to the sole holder(s) / first named holder(s) at the address registered with the Company.
If any Redemption Date is not a Business Day, Redemption Amount will be payable on the previous Business Day along with interest at the Coupon Rate payable on the relevant Coupon Payment Date which falls on such Redemption Date.
Future Borrowings
The Company shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form and also issue Debentures / Notes / other securities in any manner and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Company may think appropriate, without the consent or intimation to, the Debenture holders/Debenture Trustee in this connection.
These Debentures are unsecured.
Purchase/ Sale of Debentures
The Company may, at any time and from time to time, purchase Debentures at discount, at par or at premium in the open market or otherwise in accordance with the applicable laws. Such Debentures, at the option of the Company, may be cancelled, held or resold at such price and on such terms and conditions as the Company may deem fit and as permitted by law.
Tax Benefits to the Debenture holders 96
The holder(s) of the Debentures are advised to consider in their own case, the tax implications in respect of subscription to the Debentures after consulting their own tax advisor/ counsel.
Consents
The consents in writing of Registrar to the Issue and the Debenture Trustee to act in their respective capacities have been obtained.
Sharing of Information
The Company may, at its option, use on its own, as well as exchange, share or part with any financial or other information about the Debenture holders available with the Company, with its subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Company nor its subsidiaries and affiliates or their agents shall be liable for use of the aforesaid information.
Debenture holder not a Shareholder
The Debenture holders will not be entitled to any of the rights and privileges available to the Shareholders of the Company.
Modification of Rights
The rights, privileges, terms and conditions attached to the Debentures may be varied, modified or abrogated by the Company, with the consent, in writing, of those Debenture holders who hold at least three fourth of the nominal value of the Debentures then outstanding or with the sanction accorded pursuant to a resolution passed at a meeting of the Debenture holders as may be prescribed in the Trusteeship Agreement / Debenture Trust Deed, provided that nothing in such consent or resolution shall be operative against the Company where such consent or resolution modifies or varies the terms and conditions of the Debentures, if the same are not acceptable to the Company.
Notice(s)
All notices to the Debenture holder(s) required to be given by the Company or the Debenture Trustee from time to time, shall be deemed to have been given if sent by registered post / by courier / fax/ email to the sole / first allottee or the sole / first Debenture holder of the Debentures, as the case may be.
All notice(s) to be given by the Debenture holder(s) shall be sent by registered post or by hand delivery to the Company or to such persons at such address as may be notified by the Company from time to time through suitable communication.
Disputes and Governing Law
The Debentures are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof will be subject to the exclusive jurisdiction of the courts at Kolkata in India.
Disclosures pertaining to wilful default
The Company, its Promoter and its Directors have not been categorised as willful defaulters by any bank, financial institution or consortium in accordance with the guidelines issued by the RBI.
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APPLICATION PROCESS
Issue Procedure
Only Eligible Investors as given hereunder may apply for the Debentures by completing the Application Form in the prescribed format in BLOCK LETTERS in English as per the instructions contained therein. No application can be made for a fraction of a Debenture. Application Forms should be duly completed in all respects and applications not completed in the said manner are liable to be rejected. The name of the applicant's bank, type of account and account number must be duly completed by the applicant. This is required for the applicant's own safety and these details will be printed on the refund orders and interest/ redemption warrants.
Application Procedure
Potential investors will be invited to subscribe by way of the format of the Application Form prescribed in this Information Memorandum during the period between the Issue Opening Date and the Issue Closing Date (both dates inclusive). The Company reserves the right to close the Issue at the earlier date on the Issue being fully subscribed.
Fictitious Application: Attention of applicants is specially drawn to the provisions or Section 38 of the Companies Act, 2013: Any person who: (a) makes or abets making of an application in a fictitious name to a company for acquiring, or subscribing for, its securities; or (b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or (c) otherwise induces directly or indirectly a company to allot. or register any transfer of, securities to him, or to any other person in a fictitious name. shall be liable for action under Section 447 of the Companies Act, 2013 which includes punishment with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud. but which may extend to three times the amount involved in the fraud. Provided where the fraud in question involves public interest, the term of imprisonment shall not be less than three years.
How to Bid?
All eligible investors will have to register themselves under BSE BOND – EBP platform offered by BSE Ltd for participating in electronic book building mechanism. Investors should refer the operating guidelines for issuance of debt securities on private placement basis through an electronic book mechanism as available on web site of BSE.
Right to accept or reject bids
The Company reserves it’s full, unqualified and absolute right to accept or reject any bid(s), in part or in full, without assigning any reason thereof and to make provisional/ final allocations at its absolute discretion.
Provisional/ Final Allocation
Post completion of bidding process, Issuer will upload the provisional allocation on the BSE BOND–EBP Platform. Post receipt of investor details, Issuer will upload the final allocation file on the BSE BOND- EBP Platform.
How to apply?
All Application Forms, duly completed must be delivered before the Issue Closing Date to the Company. Applications for the Debentures must be in the prescribed form (enclosed) and completed in BLOCK CAPITAL LETTERS in English and as per the instructions contained therein.
Eligible Investors
Eligible Investors, when specifically approached, are eligible to apply for this private placement of Debentures subject to fulfilling their respective investment norms/ rules and compliance with laws applicable to them by submitting all 98 the relevant documents along with the application form.
All such Investors / transferees are required to comply with the relevant regulations/guidelines applicable to them for investing in this issue of / purchasing the Debentures and with respect to any subsequent transfer of the Debentures and shall be hound by the terms and conditions of the Debentures as set out in this Information Memorandum.
Applications not to be made by person(s) or entity(es) resident outside India (including non-resident Indians, Overseas Corporate bodies, etc.). However, Foreign Portfolio Investors will be eligible to apply for this private placement of Debentures subject to fulfilling their respective investment norms/ rules and compliance with laws applicable to them by submitting all the relevant documents along with the application form.
All investors are required to comply with the relevant regulations/guidelines applicable to them for investing in this Issue.
Documents to be provided by Investors / applicants
Investors need to submit the following documents, along with the Application Form, as applicable ▪ Memorandum and Articles of Association ▪ Board Resolution / letter authorizing the investment ▪ Certified true copy of the Power of Attorney ▪ Form 15AA for investors seeking exemption from Tax Deduction at Source (TDS) – both on Interest on Application Money as well as annual interest payments ▪ Specimen signature of the authorised signatories, duly certified by an appropriate authority ▪ PAN to be submitted
Applications under Power of Attorney
In case of applications made under a Power of Attorney or by a Limited Company or a Body Corporate etc., the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be, together with the certified true copy thereof along with the certified copy of the Memorandum and Articles of Association and/or Bye- Laws as the case may be must be attached to the Application Form or lodged for scrutiny separately with the photocopy of the Application Form, quoting the serial number of the Application Form at the Company’s branch where the application has been submitted failing which the applications are liable to be rejected.
PAN/GIR Number
All Applicants should mention their Permanent Account Number or the GIR Number allotted under Income Tax Act, 1961 and the Income Tax Circle / Ward / District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided.
Signatures
Signatures should be made in English or in any of the Indian Languages. Thumb impressions must be attested by an authorised official of a Bank or by a Magistrate/Notary Public under his/her official seal.
Details of subscription / Mode of payment
In line with SEBI circular no SEBI/HO/DDHS/CIR/P/2018/05 dated January 05, 2018 regarding Mechanism for issuance of debt securities on private placement basis through an Electronic Book Mechanism, the payment must be made through RTGS to the Designated Bank Account of Indian Clearing Corporation Ltd’s (ICCL).
The Designated Bank Account of ICCL is as under:
HDFC Bank Beneficiary Name: INDIAN CLEARING CORPORATION LTD 99
Account Number: ICCLEB IFSC Code : HDFC0000060 Mode: NEFT/RTGS
Manner of Bidding Open Book Building Mode of Allotment Uniform Mode of Settlement ICCL
Further, the subscription money will be transferred to the Company by way of electronic transfer of funds through the RTGS / NEFT mechanism for credit in the account of “TATA STEEL LIMITED”.
Right to Accept or Reject Applications
The Company reserves it’s full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The applicants will be intimated about such rejection along with the refund warrant. The Application Forms that are not complete in all respects are liable to be rejected and such applicant would not be paid any Interest on Application Money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to: a. Bank account details not given; b. Details for issue of debentures in electronic/ dematerialised form not given; c. PAN not mentioned in appropriate place; and d. In case of applications under Power of Attorney by limited companies, corporate bodies, etc. relevant documents not submitted.
In the event of number of Debentures applied for are not allotted in full, the excess application money of such applicant will be refunded, as may be permitted.
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ISSUE DETAILS
Security Name [●]% Unsecured Rated Listed Redeemable Non-Convertible Debenture Tata Steel Limited Issue Name Tata Steel 2020 NCD Issuance Issuer Tata Steel Limited Type of Instrument Rated, Listed, Unsecured, Redeemable, Non-Convertible Debentures (the “Debentures”). Nature of Instrument Unsecured Seniority Pari passu with unsecured creditors Mode of Issue Private placement under the electronic book mechanism of BSE Eligible Investors As specified under the paragraph titled “Eligible Investors “in the Information Memorandum. Listing (including name of Debentures are to be listed on the WDM of the BSE within a maximum Stock Exchange(s) where it period of 15 (Fifteen) calendar days from the Deemed Date of Allotment. will be listed and timeline for listing) In case of delay in listing of the debt securities beyond 20 calendar days from the Deemed Date of Allotment, the Issuer will pay penal interest of at least 1 % p.a. over the Coupon Rate from the expiry of 30 (Thirty) days from the Deemed Date of Allotment till the listing of such Debentures. Rating of the Instrument The Debentures are rated as ‘Ind AA’ by India Ratings And Research Private Limited (India Ratings) and “CARE AA” by Credit Analysis & Research Limited (CARE Ratings). Issue Size Rs. 670 crore Objects of the Issue and The proceeds of the issue will be used in accordance with applicable laws for details of the utilisation of general business purpose including long term working capital requirements, the Proceeds capital expenditure and repayment/prepayment of existing loans. The proceeds will, however, not be used for investments in equity/capital market, speculative activity, acquisition of land, real estate purpose, acquisitions and on-lending. Coupon Rate [●]% p.a. payable annually
Illustrative Cash Flow Dates on which coupon is payable by the Company in relation to the Debentures (“Coupon Payment Date”), please see Annexure 4 of the Information Memorandum. Step Up/ Step Down Not Applicable Coupon Rate Coupon Payment Annually Frequency Coupon Payment Date(s) Please see Annexure 4 of the Information Memorandum. Coupon Type Fixed Coupon Reset Process Not Applicable (including rates, spread, effective date, interest rate cap and floor etc.) Day Count Basis Interest payable on the Debentures will be calculated on the basis of actual number of days elapsed in a year of 365 or 366 Days as the case may be i.e. Actual/ Actual Interest on Application To be paid to investors at Coupon Rate from the date of realization of Money subscription money up to one day prior to the Deemed Date of Allotment.
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Such interest is payable within seven business days from the Deemed Date of Allotment. Default Interest Rate In case of default in payment of interest and/or Redemption Amount on relevant due dates (being the Coupon Payment Date or the Redemption Date), additional interest @ 2% p.a. over the Coupon Rate will be payable by the Issuer for the period of default on the unpaid Coupon or Redemption Amount. Delay Penalty In the case of a delay in the execution of Debenture Trust Deed beyond 3 (three) months from the Issue Closing Date, the Issuer shall refund the subscription with the agreed rate of interest or shall pay penalty interest of 2% (Two Percent) per annum over the and above the applicable Coupon Rate until such time the conditions have been complied with at the option of the Debenture holders. Tenor Five years Redemption Date Bullet Repayment at the end of five years Redemption Amount Rs. 10,00,000/- (Indian Rupees Ten Lakhs only) per Debenture (“Redemption Amount”) Redemption Premium / Not Applicable Discount Issue Price Rs. 10,00,000/- (Indian Rupees Ten Lakhs only) per Debenture Discount at which security Not Applicable is issued and the effective yield as a result of such discount Put Option Date Not Applicable Put Option Price Not Applicable Call Option Date Not Applicable Call Option Price Not Applicable Put Notification Time Not Applicable Call Notification Time Not Applicable Face Value Rs. 10,00,000/- (Indian Rupees Ten Lakhs only) per Debenture Minimum Application and Not applicable in multiples of Debentures thereafter Issue Opening Date: March 12, 2020 Issue Timing Issue Closing Date: March 12, 2020 Pay in Date: March 13, 2020 [T+1 settlement] Deemed Date of Allotment: March 13, 2020 Issuance mode of the Demat Debentures Trading Mode of the Demat Debentures Settlement Mode of the Bank Transfer / RTGS / NEFT or any other mode of payment permissible Debentures under law Depository NSDL/ CDSL Business Day Convention If any Coupon Payment Date falls on a day that is not a Business Day, the Coupon payment shall be made on the immediately succeeding Business Day. If the redemption date / exercise date / Maturity Date of the Debentures falls on a day that is not a Business Day, the Redemption Amount (excluding
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Coupon) shall be paid on the immediately preceding Business Day. Record Date The Record Date for the Debentures shall be 15 days prior to the date of each of the Coupon Payment Date and/or the Redemption Date, as the case may be. Security Unsecured Security Creation Not applicable Future Borrowings The Company shall be entitled to borrow/ raise loans or avail of financial assistance in whatever form and also issue Debentures / Notes / other securities in any manner and to change its capital structure, including issue of shares of any class or redemption or reduction of any class of paid up capital, on such terms and conditions as the Company may think appropriate, without the consent or intimation to, the Debenture holders/Debenture Trustee in this connection. Transaction Documents The Issue will be governed by documentation as agreed for the transaction including Information Memorandum, Debenture Trust Deed, Trusteeship Agreement, credit rating letters, listing application, in principle listing approval, debenture trustee consent letter, private placement offer letter in form PAS-4 and corporate Authorizations. Conditions Precedent to Not Applicable Disbursement Conditions Subsequent to 1. Execution of the Debenture Trust Deed within 3 (three) months from the Disbursement Issue Closing Date. 2. Completion of listing of Debentures on the stock exchange Event of Defaults As per the Debenture Trust Deed Provisions related to Cross Not Applicable Default Debenture Trustee IDBI Trusteeship Services Limited Role and Responsibilities To oversee and monitor the overall transaction for and on behalf of the of Debenture Trustee Debenture Holders . Governing Law and The Debentures and documentation will be governed by and construed in Jurisdiction accordance with the laws of India and the parties submit to the exclusive jurisdiction in Kolkata.
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ANNEXURE – 1 - CONSENT FROM IDBI TRUSTEESHIP SERVICES LIMITED TO ACT AS THE DEBENTURE TRUSTEE
[
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ANNEXURE – 2A - RATING ISSUED BY INDIA RATINGS AND RESEARCH PRIVATE LIMITED (India Ratings)
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ANNEXURE – 2B - RATING ISSUED BY CREDIT ANALYSIS & RESEARCH LIMITED (CARE Ratings)
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ANNEXURE – 3 - APPLICATION FORM TSL NCD Issuance 2020 (Private and Confidential (for addressee only)
Tata Steel Limited CIN– L271000MH1907000260 Registered Office: Bombay House, 24 HomiMody Street, Fort, Mumbai-400 001 Website: www.tatasteel.com Tel: +91 22 6665 8282, Fax: +91 22 6665 7724 e-mail: [email protected]
Application Form for Private Placement of Unsecured, Redeemable, Rated, Listed, Non-Convertible Debentures (NCDs)
Application No. Date :
Dear Sirs,
Sub: Issue of 6,700, [●]% Coupon, Unsecured, Redeemable, Rated, Listed, Non-Convertible Debentures (“NCD”) of the face value of Rs. 10,00,000 each, for cash aggregating Rs. 670 Crore (Rupees Six Hundred and Seventy Crores only) (the “Issue”) on a private placement basis.
Having read and understood the contents of the Information Memorandum of private placement dated March 9, 2020 in connection with the offer of 6,700 NCDs of the face value of Rs. 10,00,000 each, for cash, aggregating to Rs. 670 Crore (Rupees Six Hundred and Seventy Crore only), we apply for allotment to me/us of the NCDs. The amount payable on application as shown below is remitted herewith. On allotment, please place my/ our name(s) on the Register of Debenture holder(s). We bind ourselves to the terms and conditions as mentioned in the Disclosure Document and the relevant pricing supplement.
(Please read carefully the instructions on the next page before filling up this form)
Debenture 6,700, [●]% Coupon, Unsecured, Redeemable, Rated, Listed, Non-Convertible Debentures aggregating to Rs. 670 Crore Number of debentures applied for (Rs.10,00,000 per debenture) Amount (Rs.) in figures Amount (Rs.) in words
Applicant’s name and address in full (in capital letters) :
Pin Code Tel: Fax: Email:
Status : [ ] Companies [ ] Mutual Funds [ ] Financial Institutions [ ] Insurance Companies [ ] Banks [ ] Others
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Details of Bank Account
Bank Name and Branch :
Nature of Account Account No. Branch RTGS code (IFSC)
Depository Details
DP Name
DP ID Client ID
We understand that in case of allotment of debentures to us/our Beneficiary Account as mentioned above would be credited to the extent of debentures allotted.
Tax Details PAN / GIR No. Circle / Ward / District
Tax Deduction Status [ ] Fully Exempt [ ] Tax to be deducted at source
[ ] Yes [ ] NO
Copies of tax exemption certificate / PAN Card / Declarations attached
Name of authorized signatory Designation Signature
------(Tear here)------
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Tata Steel Limited CIN– L271000MH1907000260 Registered Office: Bombay House, 24 HomiMody Street, Fort, Mumbai-400 001 Website: www.tatasteel.com Tel: +91 22 6665 8282, Fax: +91 22 6665 7724 e-mail: [email protected]
ACKNOWLEDGEMENT SLIP
Application No. : ______Date: ______
Received from ______Rs. ______/- by Cheque / Demand Draft No.______drawn on ______towards application for ______Debentures.
(Cheques / Demand Drafts are subject to realization)
INSTRUCTIONS
1. Application Form must be completed in full in BLOCK LETTERS IN ENGLISH. A blank space must be left between two or more parts of the name. Signatures should be made in English or in any of the Indian languages. Signature in a language other than English must be attested by an authorized official of a Bank or by a magistrate / notary public under his / her official seal.
2. The full amount of Debenture has to be paid along with the application form.
3. Application form duly completed in all respects and must be submitted to the Registered Office of the Company at Bombay House, 24 Homi Mody Street, Fort, Mumbai-400 001 on or before the closing date of the issue. The payment must be made through RTGS to the Designated Bank Account of Indian Clearing Corporation Ltd’s (“ICCL”).
The Designated Bank Account of ICCL is as under:
HDFC Bank Beneficiary Name: INDIAN CLEARING CORPORATION LTD Account Number: ICCLEB IFSC Code : HDFC0000060 Mode: NEFT/RTGS
4. Applications made by categories of investors other than individuals must be accompanied by certified copies of Memorandum and Articles of Association, Board Resolution / Power of Attorney for investment, authority to authorized signatories in case of limited companies or corporate bodies, Certificate of registration, Electricity/ Telephone Bill.
5. Please mention your Permanent Account Number or the GIR number allotted under Income Tax Act, 1961 and the Income Tax Circle/Ward/District. In case where neither the PAN nor GIR number has been allotted, the fact of non- allotment should be mentioned in the application form in space provided.
6. Receipt of application will be acknowledged in the “Acknowledgement Slip” appearing below the Application Form. No separate receipt will be issued.
7. The application would be accepted as per the terms of the issue outlined in the Disclosure Document.
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ANNEXURE – 4 - ILLUSTRATIVE CASH FLOWS
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ANNEXURE – 5 - IN-PRINCIPLE LISTING APPROVAL
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