Mumbai, Oct. 1: Tata Steel has sewn up a deal with a consortium of banks under which they will lend close to Rs 35,000 crore (roughly $6.6 billion) to finance its upcoming project in Odisha.

The consortium of lenders is led by the State Bank of India and comprises several private and foreign banks. Among them, the SBI group is understood to have agreed to lend around Rs 10,000 crore.

Although the terms of the sanctioned loan could not be ascertained, sources said it was close to the base rate. Recently, the SBI slashed its base rate — the benchmark for its lending operations — to 9.75 per cent.

Tata Steel is setting up a 6-million-tonne plant, which is under construction, at Kalinganagar. The company is going to spend Rs 24,000 crore in the first phase and another Rs 12,000 crore in the second phase. Much of the first-phase investment has already been made.

In the company’s report for 2011-12, group chairman Ratan Tata had said the first phase of 3 million tonnes was scheduled to start operations in 2014, subject to essential captive mining approvals from the government.

Tata Steel has received approvals for project execution that include environmental clearance. It has placed orders for key technological packages associated with the plant. Once this plant starts production, Tata Steel’s product mix will be strengthened with the addition of high-end galvanised coil and cold-rolled coils for general engineering.

The Tata Steel spokesperson refused to comment on the deal. However, sources said the sanction reflected the confidence of the bankers not only in the company but also in the project.

While banks have been witnessing weak credit demand because of the economic slowdown, they also have been cautious in lending, particularly to certain sectors, because of the macro-economic situation and fear of more defaults.

According to industry observers, now that the bankers have agreed to put up Rs 35,000 crore in loans, it will be interesting to watch the pace of the drawdown.

In the first quarter ended June, the Tata Steel group had reported a net debt of $9.30 billion. Most of the debt had come to its books after it acquired Anglo-Dutch steel giant Corus, which is now known as Tata Steel Europe.

Besides the Odisha project, Tata Steel is also undertaking an expansion of 2.9 million tonnes in Jamshedpur. This project will come on stream this fiscal.