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Funding of Corus Transaction

Mumbai, April 17, 2007

At the Board Meeting held today, the Board approved the following sources of funding Tata Steel's investment of USD 4.1 billion (about Rs.17,750 crores) in its wholly-owned subsidiary Tata Steel Asia Holdings (Singapore) Ltd. which would in turn invest the same in Tata Steel UK which has acquired CORUS plc. U.K.

1. As part of Tata Steel's contribution, the Company has already invested the following as part of its equity commitment:

a) Internal Generation - Rs.3,000 crores (USD 700 million).

b) External Commercial Borrowings - Rs.2,170 crores (USD 500 million).

c) Funds from the Preferential Issues of equity shares to Tata Sons Ltd. (which were approved earlier and have since been allotted) - comprising equity shares of the face value of Rs.56 crores at an average price of Rs.499.7 per share, which has provided a total amount of Rs.2,770 crores (USD 640 million).

2. The following proposals have now been approved by the Board:-

i) A Rights Issue of equity shares to the shareholders in the ratio 1:5 at a price of Rs.300 per share (of Rs.10 each) which would involve issue of equity shares of the face value of Rs.122 crores and would provide an amount of Rs.3655 crores (USD 862 million).

ii) A simultaneous but un-linked Rights Issue of Convertible Preference Shares in the ratio of 1:7 having a coupon rate of 2% with conversion into equity shares after two years at a price in the range of Rs.500 to Rs.600 per share as may be determined at the time of the issue. This issue would provide a total amount of about Rs.4,350 crores (about USD 1000 million).

iii) Tata Sons Ltd. would stand-by to take up the unsubscribed portion of both the above issues in fulfillment of its support to Tata Steel for the Corus acquisition.

iv) A foreign issue of an equity-related instrument upto an amount of upto USD 500 million (about Rs. 2,100 crores including the premium) in such form as may be considered appropriate. This issue would be made on an ex-Right basis and on terms as may be determined at the time of the issue subject to approval of the shareholders.

The following important points of this total financing scheme of USD 4.1 billion
(about Rs.17,750 crores) may be noted:-

a) For the acquisition, Tata Steel will be utilising additional debt of only USD 500 million (about Rs.2,170 crores) which represents only 12% of the total amount required.

b) Apart from the preferential issues of equity shares of Rs.56 crores allotted to Tata Sons (at prices which were higher than the then prevailing market prices), Tata Steel would be raising additional equity share capital of the face value in the range of about Rs.250 - 280 crores depending on the final pricing of the various issues. This increase in the equity capital will come into effect only in stages during the three financial years 2007-08 to 2009-10 which will therefore ease the burden of servicing.

c) The post-tax cost of this total financing package on completion is expected to be around 4.3% per annum.

The above-mentioned issues and the details thereof would be subject to such approvals as may be required and such modifications as may be considered necessary in the course of implementation.

The long term financing pattern for the net acquisition consideration of Corus would be USD 12.9 billion and Tata Steel UK would be funded in the long term from the following sources:

Equity Capital from Tata Steel Ltd USD 4.10 billion
Long-term debt from consortium of banks USD 6.14 billion
Quasi - Equity funding at Tata Steel Asia Singapore USD 1.25 billion
Long term Capital funding at Tata Steel Asia Singapore USD 1.41 billion
Total USD 12.90 billion

a) Tata Steel Ltd will provide USD 4.1 billion from the various sources indicated above and will invest the above quantum through its wholly owned indirect subsidiary Tata Steel UK.

b) Non recourse debt financing arranged by a consortium of banks of USD 6.14 billion directly at Tata Steel UK

c) The balance amount of USD 2.66 billion has presently been raised in the form of bridge finance in Tata Steel Asia Singapore, and discussions are under way to raise these funds through appropriate instruments.

For investor enquiries contact: For media enquiries contact:
Koushik Chatterjee
Tel : + 91 22 6665 8112 / 7276
Sanjay Choudhry
Tel : + 91 657 243 1142
Sanjay Khattry
Tel: + 91 22 6665 7289
Milind Rege
Tel: +91 22 6665 7293