Steel major Tata Steel Ltd on Friday announced a mega merger of listed and unlisted companies, mainly to derive business synergies and also to reduce and simplify the Tata Group’s steel business structure.
Tata Steel’s Board on Thursday approved the amalgamation of seven group companies with the former.
The merging seven companies are: Tata Steel Long Products Ltd, Tinplate Company of India Ltd, Tata Metaliks Ltd, TRF Ltd, Indian Steel & Wire Products Ltd, Tata Steel Mining Ltd, and S & T Mining Company Ltd.
The latest group rejig comes after the announcement of the merger of Tata Coffee Ltd with Tata Consumer Products Ltd.
A reorganization of the group’s aviation business has also been reported in the media. The group has Air India, Air India Express, AI SATS, Vistara, and Air Asia.
The metal group companies’ prime focus and share exchange ratios are as follows:
Tata Steel Long Products (listed) is in the business of production and marketing of sponge iron, which is a single end use (steel making) and a single grade product.
The amalgamation will consolidate the business of Tata Steel Long Products and Tata Steel resulting in focused growth, operational efficiencies, and business synergies. In addition, resulting corporate holding structure will bring enhanced agility to business ecosystem of the merged entity.
As per of the amalgamation scheme, Tata Steel will issue 67 fully paid shares of Re 1 each to shareholders of Tata Steel Long (except Tata Steel) for every 10 fully paid up equity shares of Rs 10 each.
A subsidiary of Tata Steel, The Tinplate Company (listed) is engaged in the manufacture of tinplate and tinplate-related products which is a value-added product of hot rolled coils.
Tata Steel believes that the resources of the merged entity can be pooled to unlock the opportunity for creating shareholder value.
There will be 33 shares of Tata Steel issued for every 10 shares of Rs 10 each for shareholders of The Tinplate Company.
Tata Metaliks (listed) is a subsidiary company of Tata Steel, manufacturing and selling of pig iron and ductile iron pipes and its allied accessories. 70 shares of Tata Steel will be issued for every 10 shares held by Tata Metaliks shareholders.
TRF Ltd (listed) is primarily engaged in the business of undertaking turnkey projects of material handling for the infrastructure sector and also in production of such material handling equipments. Here, 17 shares of Tata Steel will be issued for every 10 shares of TRF Ltd held by its shareholders.
Indian Steel & Wire Products Ltd (unlisted) is primarily engaged in the business of manufacture of wire rods, TMT rebars, wires and wire products as an external processing agent of the Tata Steel and manufacturing and direct marketing of welding products, nails, rolls, and castings. Rs 426 will be paid per share of Rs 10 held by shareholders.
Tata Steel Mining Ltd (unlisted), a wholly-owned subsidiary of Tata Steel, has its presence in the manufacture of ferro chrome.
Further, through its successful acquisition of Rohit Ferro Tech Ltd under Insolvency and Bankruptcy Code, 2016, it has its manufacturing facility in Jajpur, Odisha and Bishnupur, West Bengal.
Along with manufacturing of ferro chrome, Tata Steel Mining has also pursued the commercial mining of chrome ore and iron ore and have executed mining leases for three chromite blocks viz. Sukinda, Saruabil and Kamarda in Jajpur and is awaiting execution of mining lease for an iron ore block located at Gandhalpada in the state’s Keonjhar district.
On amalgamation, the entire paid-up share capital of Tata Steel Mining will get cancelled.
S & T Mining Company Ltd (unlisted) is another wholly-owned subsidiary of Tata Steel, and engaged, inter alia, in the business of acquiring coal blocks, carrying out exploration, development of mine, extraction and mining of coal from the identified blocks.
However, it has been non-operational since FY 2018-19, and upon amalgamation, the entire paid-up capital will stand cancelled.
According to Tata Steel, each scheme is subject to regulatory approvals.
As on March 31, Tata Steel had net assets of Rs 1,25,433.76 crore and revenue from operations of Rs 1,29,021.35, the Tinplate Company assets of Rs 1,170.97 crore and revenue of Rs 4,249.51 crore, Tata Metaliks Ltd assets of Rs 1,525.27 crore and revenue of Rs 2,745.53 crore, TRF Ltd assets of Rs 289.52 crore and revenue of Rs 127.14 crore, Indian Steel & Wire assets of Rs 142.05 crore and revenue of Rs 354.15 crore, Tata Steel Mining assets of Rs 77.36 crore and revenue of Rs 4,605.38, and S & T Mining assets of Rs 0.77 crore while revenue was nil.