Tata Steel has approved the issuance of non convertible debentures (NCD) worth Rs 5,000 crore with the aim to finance debt payments and for other general corporate purposes.

The company’s board accorded an approval to the new issue, which will be over and above a Rs 12,000-crore NCD issue approved by the board in August 2018.

The NCDs will be issued on a private placement basis and in several tranches.

On April 13, a committee of directors had approved raising Rs 7,000 crore by NCD, which was a part of the previous board approval.

The first batch of the NCDs were unsecured, listed on the BSE wholesale debt market. They carried annual interest payment and principal payment in one shot after three years.

Four days after the committee meeting, it allotted debentures worth Rs 1,025 crore, carrying a coupon rate of 7.85 per cent.

On Wednesday, the company further issued Rs 510 crore worth of NCDs.

The fresh board approval came at a time the economy has come to a standstill during the nationwide lockdown which completed a month on Friday.

Tata Steel’s sales declined 14.6 per cent in the entire last quarter, of which just about a week was under lockdown. The lower demand was because of logistics issues and the shutdown of operations in automotive, construction and other segments.

Even though the quarterly financial results will be published later, industry observers expect an impact on the revenue and profitability of the steel firms, along with nearly all other industries under lockdown.

Tata Steel had earlier said deleveraging the balance sheet would be one of the top priorities for the company. Given the uncertainty around economic activity because of the Covid-19 pandemic, the target may be now hard to achieve this fiscal.

Edelweiss Research in a note two days back revised Tata Steel’s Q4 profit after tax guidance to a loss of Rs 584 crore from an earlier projection of profit of Rs 1,181 crore. It also projected a tepid profitability for this fiscal, led by a demand dip in the domestic market, lower exports realisation and sustained weakness in domestic prices owing to destocking. Moreover, it projected Tata Steel Europe to make losses at the operating level in 2020-21.

An accelerated pace of issuance of NCD could be one of the ploys the company may evaluate to repay debt which could have possibly been paid off by an internal generation of resource if the virus outbreak had not pushed the world and the Indian economy in turmoil.