Tata Steel on Wednesday reported to the stock exchanges that its subsidiary Tata Steel Long Products Ltd has accepted the letter of award (LoA) for the acquisition of Odisha-based Neelachal Ispat Nigam Ltd (NINL).
The process for acquisition of NINL bids fairs to be completed within the next couple of months in agreement with the timelines disclosed by DIPAM, Tata Steel said in a statement. DIPAM (Department of Investment and Public Asset Management) has administered the letter of award to Tata Steel Long Products for the acquisition of 93.71% equity stake of NINL on 2 February.
Earlier on Jan 31, 2021, Tata Steel Long product became the winner of the bidding process to acquire a 93.71% stake in the 1 million ton per annum Neelachal Ispat Nigam Limited that was conducted by the Department of Disinvestment & Public Asset Management (‘DIPAM’), Government of India.
NINL’s plant has been shut since March 2020. It had a negative net worth of Rs 3,487 crore and accumulated losses of Rs 4,228 crore as of March 31, 2021. Its debt and other liabilities totalled more than Rs 6,600 crore at the end of the last fiscal year.
The acquisition of NINL is crucial for Tata Steel to build a trustworthy long products complex that will leverage the synergies with the shared infrastructure of Tata Steel in the area.
\The total consideration of Rs 12,100 Crore contemplates the enterprise value (including all recorded liabilities) as part of the acquisition of a 93.71% equity stake in NINL. This is a strategic acquisition for the Tata Steel business in India with around one million tons per annum of steel-making capacity, 2500 acres of land for future growth and iron ore reserves of around 100 million tons.
The acquisition of NINL will provide a significant opportunity for Tata Steel to not only restart the one million ton per annum steel plant expeditiously, but also begin work immediately to build a 4.5 million ton per annum state of the art long products complex in the next few years, and further expand it to 10 million tones per annum by around 2030.
