Tata Steel on Monday said that it has completed the acquisition of 93.71 per cent in Neelachal Ispat Nigam Limited (NINL) through its listed step-down subsidiary, Tata Steel Long Products (TSLP).
On January 31, TSLP was declared the winning bidder for the one million tonne (mt) NINL, an asset owned by central and state public sector undertakings, in a process run by the Department of Disinvestment & Public Asset Management (DIPAM), for a consideration of Rs 12,100 crore. The transaction was completed today through a purchase of equity shares and non-convertible redeemable preference shares.
The transaction entailed subscription of over 484 million equity shares aggregating to Rs 3,100 crore by TSLP; subscription of 0.01 per cent, 456 million non-convertible redeemable preference shares aggregating to approximately Rs 4,560.54 crore and purchase of 694 million equity shares by TSLP from MMTC, NMDC, MECON, Bharat Heavy Electricals, Industrial Promotion and Investment Corporation of Odisha Ltd, and Odisha Mining Corporation Ltd, for the balance consideration.
Consequently, NINL has become a subsidiary of TSLP and an indirect subsidiary of Tata Steel, the company said. Tata Steel said that the plan was to not only restart the one million tonne per annum steel plant expeditiously but to also work simultaneously to expand the capacity by building a 4.5 mt state-of-the-art long products complex in the next few years, and further expand it to 10 mt per annum by 2030.
Apart from a 1.1 mt plant, NINL has iron ore mines with reserves of 90 mt and about 2,500 acres of land providing scope for future expansion. Tata Steel already has plans to increase capacity to 40 mt by 2030 in India. The NINL acquisition, the company said, strengthens its growth plan over the next decade while providing the enablers to even go beyond the 40 mt target.
Commenting on the completion of the acquisition, T V Narendran, CEO & managing director, Tata Steel, and chairman, TSLP said, “Acquisition of NINL is a historic achievement and a significant milestone towards building a dedicated long products facility for the Tata Steel Group.”
“The completion of the transaction is a testimony to Government of India’s focus on its disinvestment programme. The acquisition also reflects Tata Steel’s commitment to the state of Odisha and the communities around its operations,” he added. He also said that it would be Tata Steel’s endeavour to enable a swift transformation of NINL into a state-of-the-art, competitive and sustainable enterprise.
The acquisition of NINL is in sync with Tata Steel’s plan to grow its long product capacity as India focuses on infrastructure spend which is expected to boost steel consumption. Tata Steel will leverage its capability in the long products business using its strong brand equity, particularly in the retail construction segment, and its extensive, pan-India retail and distribution network to drive scale in long products, the company said.
Categories: Corporate M&A