The bulk of repayments are back-ended
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BYSPECIALARRANGEMENT
Even as State-run NMDC Steel Ltd remains on the government’s divestment radar, the company in FY25, its first full year of operations, with total borrowings of ₹5,897.64 crore, down 11.3 per cent from ₹6,651.77 crore in FY24, as repayments and reduced long-term debt outweighed a rise in short-term working capital loans.
Long-term borrowings fell sharply to ₹3,289.31 crore in FY25 from ₹4,261.02 crore a year earlier, driven by scheduled repayments on bank term loans and no new major project loans being added. Short-term borrowings, however, increased to ₹2,608.33 crore (₹2,390.76 crore in FY24), reflecting higher working capital demand to fund operations during the ramp-up of the 3 mtpa Nagarnar steel plant
Divestment Push
The Board in its Directors’ Report noted the process is being undertaken by the Department of Investment and Public Asset Management (DIPAM). “The company is extending full support in this regard,” it mentioned.
In the annual report, the management further noted that, the company continues to remain on the list of entities identified for divestment.
“The timing and modalities of the proposed strategic sale are to be decided by the government, keeping in view market conditions and operational performance of the company,” it said.
As per the preliminary Information Memorandum and Request for Expression of Interest invited, GOI had decided to divest its 50.79 per cent shareholding in resulting the company along with management control to strategic buyer. “Additionally, GoI shall offer 10 per cent stake in NMDC Steel, to NMDC Ltd after the strategic buyer has been identified through the bidding process,” the company mentioned in its annual report.
Borrowings Breakdown
NMDC Steel reported a loss of ₹2,374 crore, even as it saw turnover jump substantially in the first full year of operations to ₹8,503 crore.
The company top brass in its annual report mentioned, there were no payment defaults during the year.
The long-term borrowings at present include, secured term loans from banks: ₹2,487 crore; loans from financial institutions: ₹278 crore and non-convertible debentures (NCDs): ₹523.80 crore — transferred from NMDC Ltd at demerger and due for redemption in August 2025.
The bulk of repayments are back-ended.
The company has borrowings amounting to ₹523.80 crore in the form of NCDs. The NCDs are unsecured, non-cumulative, non-convertible, redeemable taxable bonds of face value ₹10 lakh each carrying an interest rate of 7.30 per cent. Subsequent to demerger and revision in the rating (downgraded), the coupon rate was revised upwards at least twice. The NCDs are redeemable in August 2025 in full.
The company has a rupee term loan sanction of ₹4,476.20 crore from the State Bank of India and has drawn ₹4,475.81 crore. As per the sanction terms of the loan, the interest rate was fixed at 7.1 per cent linked to 6-month MCLR up to the date of commencement of commercial operations. And thereafter grid based pricing for rupee term loan to be determined by the Bank linked to external credit rating of the company. Accordingly, the present interest rate applicable is 12.45 per cent.
“The loan is repayable in 30 structured quarterly instalments starting from March 2024 by June 2031,” the Annual Report mentioned.
NMDC Steel had a sanctioned working capital limit of ₹4,100 cr (fund based: ₹2,600 crore & non fund based ₹1,500 crore).The utilisation of limits till March 2025 stood at ₹1,597.07 crore of fund based and ₹559.77 cr of non- fund based limits.
“The working capital Borrowings are secured by way of a first ranking pari passu charge on all the current assets both present and future,” the company mentioned in the annual report.
Analytical Ratios
NMDC Steel’s debt-to-equity ratio stood at 0.45 at the close of FY25, marginally higher than the previous year’s 0.43, while finance costs nearly doubled to ₹651.94 crore from ₹330.59 crore in FY24, partly due to the first full year of interest expense post-commissioning.
Management has reiterated that debt service commitments will be met through internal cash generation and parent support, while efforts to expand the share of value-added steel products are expected to bolster realisations in FY26.
Interest coverage deteriorated sharply to 0.31 from 0.70, highlighting the strain of higher finance costs amid subdued operating profit.
Net profit margin remained negative at -40.62 per cent (vs -38.77 per cent), underscoring the continued losses in the plant’s initial phase.
Return on equity was negative at -15.59 per cent (FY24: -12.54 per cent) due to the widened net loss. The current ratio improved modestly to 1.07 from 1.03, indicating slightly better liquidity.
Published on August 16, 2025
