Tata Steel Ltd plans to repay much of its overseas debt over the next two years using internal cash flows, prioritising balance sheet strengthening as it pursues calibrated growth, a company spokesperson said.
Tata Steel's overseas debt stood at ₹16,629 crore at the end of FY26, amounting to 18% of the company's total borrowings of ₹92,382 crore, the spokesperson said in an emailed response to Mint. The figure includes both term debt and working capital borrowings across the company's businesses.
Term loans are long-term borrowings typically used to fund capital expenditure, while working capital loans are used for short-term operational needs.
Tata Steel, India's second-largest steelmaker, has significantly reduced its exposure to foreign-currency borrowings over the past five years. Until FY21, around half of its borrowings were denominated in foreign currencies. By the end of FY26, that share had plummeted to 18%.
According to Tata Steel’s FY26 annual report, lower foreign-currency debt helped shield its balance sheet from currency volatility. Without this, gross debt would have been about ₹12,500 crore higher due to rupee depreciation.
Shares of Tata Steel ended 1.8% lower at ₹206.80 apiece on the BSE on Friday.
No refinancing plan
Tata Steel’s overseas bonds are issued through subsidiary Abja Investment Company and mature in January 2028.
"Tata Steel does not plan to refinance this debt and will repay it at maturity," the spokesperson told Mint in an email.
Following the repayment, the only overseas borrowings remaining on the books will be working capital facilities supporting international operations, the spokesperson added. The company, however, did not disclose the size of these working capital loans.
The company also clarified that most of the debt originally raised to fund the acquisition of Corus Plc in 2007 has already been repaid.
“This debt may have a small amount of refinanced acquisition debt, but largely consists of debt raised in the intervening years, to invest in the business,” the spokesperson said.
Balance sheet focus
The steelmaker saw net debt rise from ₹51,049 crore in FY22 to a high of ₹82,579 crore in FY25 amid a period of heavy expansion. However, it reversed the trend in FY26, reducing net debt to ₹80,144 crore.
Its debt-reduction efforts are also reflected in leverage metrics. Tata Steel’s net debt-to-Ebitda ratio improved to 2.3x in FY26 from 3.2x in FY25 and 3.5x in FY24, marking its strongest leverage position in three years.
“For the last few years, we have been focusing on the onshoring of overseas debt to mitigate the rupee depreciation risks,” Tata Steel chief executive officer T.V. Narendran and chief financial officer Koushik Chatterjee said in the company’s FY26 annual report.
“As a result, overseas debt now accounts for only 18% of total borrowings, compared with around 50% in FY21.”
Measured expansion
Analysts expect the company’s debt profile to remain manageable despite ongoing investments.
“Tata Steel's debt is unlikely to rise significantly despite its ongoing expansion plans, as the company is consciously avoiding the kind of aggressive upstream capacity additions being pursued by larger rival JSW Steel,” said Aditya Welekar, metals and mining analyst at Axis Securities.
Welekar added that Tata Steel is focusing on expanding its portfolio of value-added products.
However, a conservative expansion strategy may also have implications for market share growth.
“Tata steel should exhibit limited production growth post FY27, as NINL expansion will take some time to commission and electric arc furnaces would provide limited volumes. As a result, Tata steel is likely to lose market share in India to peers such as JSW,” said Satyadeep Jain, metals and mining analyst at Ambit Capital.
NINL, or Neelachal Ispat Nigam Ltd, is a wholly-owned subsidiary of Tata Steel.
Capacity runway
Addressing concerns around slower capacity additions, Tata Steel said it retains substantial flexibility to expand upstream steelmaking capacity in India.
Existing facilities at Odisha's Kalinganagar, Meramandali, and Neelachal and Jharkhand's Jamshedpur provide scope to increase capacity to 45-50 million tonnes per annum (mtpa). The proposed Maharashtra project could add another 6-10 million tonnes. The company's current consolidated production capacity is 36 mtpa, of which 27.35 mtpa is in India.
While the option to expand exists, the company said the pace of growth will depend on market conditions and financial considerations.
“The question is how fast we want to build upstream and where, based on the demand, based on the balance sheet and many other things,” the spokesperson said.
The company is focused on strengthening its position in attractive, higher-margin segments rather than chasing volume growth alone.
Tata Steel is more interested in market share in key attractive segments, and wants to make sure that they are growing market share in attractive, value-added segments rather than solely pursuing volume growth, the spokesperson said.
Tata Steel plans to spend about ₹20,000 crore on capital expenditure in FY27, with around 60% earmarked for domestic operations.
The spending will support the expansion of Neelachal Ispat Nigam Ltd., downstream facilities and mining infrastructure.