Tata Steel Long Products to acquire 93.71% stake in MMTC backed Neelachal Ispat Nigam for Rs12,100 crore; Stocks trade higher

11 Mar 2022 , 09:49 AM

Tata Steel Limited (TSL) and Tata Steel Long Products Limited (TSLP) on March 10, 2022 executed a Share Sale and Purchase Agreement with MMTC Ltd, NMDC Ltd, MECON Ltd, Bharat Heavy Electricals Ltd, Industrial Promotion and Investment Corporation of Odisha Ltd, Odisha Mining Corporation Ltd., President of India, Government of Odisha, Neelachal Ispat Nigam Limited (‘NINL’) for acquisition of 93.71% equity shares in NINL. The acquisition will be done through TSLP, a listed subsidiary of TSL.

At around 9.45 am, Tata Steel Ltd was trading at Rs1,337.30 per piece up by Rs28.9 or 2.21% from its previous closing of Rs1,308.40 per piece on the BSE. Tata Steel Long Products Limited was trading at Rs746.30 per piece up Rs13.45 or 1.84% on the BSE. MMTC Ltd was trading at Rs48.70 per piece up by Rs1.45 or 3.07% from its previous closing of Rs47.25 per piece on the BSE.

“The acquisition provides an inorganic growth opportunity for TSLP to grow in the long products business and leverage the captive iron ore mines of NINL,” Tata Steel said in a filing on Thursday.

The total consideration of Rs12,100 crore reflects the enterprise value, from which the liabilities shall be settled and the balance shall be paid for acquisition of 93.71% equity shares in NINL, it added.

NINL has a 1.1 mtpa integrated iron and steel plant at Kalinganagar Odisha, along with iron ore mines with a reserve of ~90 MT. The revenue of NINL for the previous 3 financial years is as follows:

• FY21: Rs24 crore
• FY20: Rs941 crore
• FY19: Rs2,025 crore

“We wish to inform you that the Company has executed the Share Purchase Agreement and Escrow Agreement (Definitive Agreements) for sale of its entire equity holding of the Company in NINL to TSLP, the successful bidder selected through the two stage auction procedure involving a competitive bidding process, run under the aegis of Department of Investment & Public Asset Management (DIPAM). The Definitive Agreements have been executed by all promoters/sellers, Govt. of India, Govt. of Odisha and the buyer,” MMTC Limited said in separate filing.