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Tata Steel announced that the company has completed the acquisition of Neelachal Ispat Nigam Ltd. (NINL), improving the steel giant's hold in the construction and infrastructure sector.
The acquisition of the stressed company has been completed in accordance with the rules set out by Tata Steel Long Products, a subsidiary of Tata Steel. The company was chosen as the successful bidder for the company by the Department of Investment and Public Asset Management (DIPAM) on January 31, 2022.
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In a statement by the company, it said that it acquired 93.71% in NINL, a JV between four central public sector enterprises -- MMTC, NMDC, BHEL, MECON -- and two Odisha government public sector units -- OMC and IPICOL, for a consideration of Rs 12,100 crores.
The consideration involves a subscription of 48.43 crore shares for Rs 3,100 crore and 45.6 crore non-convertible redeemable preference shares for Rs 4,506.54 crore, which will be utilized by NINL to pay off its liabilities. MMTC & NMDC, the largest shareholders of NINL, will stand to gain the most from this acquisition.
This acquisition will allow the company to access the 1.1 million ton steel plant in Odisha (which was shut down in March 2020 due to continued losses), 2,500 acres of land, and an iron ore mine with estimated reserves of 90 million tonnes. Moreover, the company plans not only to restart the plant but also aims to expand its capacity to 10 million tonnes by 2030.
"The plan is to not only restart 1 MTPA steel plant expeditiously but to also work simultaneously to expand the capacity by building a 4.5 million tonnes per annum state-of-the-art long products complex in the next few years, and further expand it to 10 MTPA by 2030," the company said.
The share of Tata Steel has continuously declined ever since China announced that it was reducing its output by a substantial margin. The stock slid over 8% that day and it kept falling ever since. The stock closed at Rs 858.15 per share, marginally lower than yesterday, registering a loss of 23% from the beginning of 2022.
However, China announced the formation of a $75 billion infrastructure fund to improve infrastructure spending and revive its flagging economy, after the markets closed today. Good movement can be expected in the metal stocks in the coming days as global demand for metals is set to improve.
Tata Steel Long Products is also a listed company as it closed at Rs 574.35 per share, marginally higher than yesterday's close.
Article by Aman Agarwal.
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