Tata Steel informed the stock exchanges that its arm Tata Steel Long Products Ltd has accepted the letter of award (LoA) for acquisition of Odisha-based Neelachal Ispat Nigam Ltd (NINL).
DIPAM (Department of Investment and Public Asset Management) has issued the letter of award to Tata Steel Long Products for acquisition of 93.71% equity stake of NINL on 2 February.
The process for acquisition of NINL is likely to be completed within the next couple of months in accordance with the timelines announced by DIPAM, Tata Steel said in a statement.
Earlier, Tata Steel has been selected as the winning bidder for acquiring 93.71% stake in NINL for ₹12,100 crore. Ratings agency Moody’s Investors Service said the acquisition is credit positive because it will increase the subsidiary’s long-steel production capacity and its reserves of iron ore.
The acquisition of NINL is critical for Tata Steel to build a dedicated long products complex which will be positioned to leverage synergies with the shared infrastructure of Tata Steel in the area.
Still, NINL is loss-making and Moody’s Investors Service said that it believes that the acquisition price largely reflects the steel plant, iron ore reserves and the land acreage that can accommodate capacity expansions.
And, while the acquired operations are substantially smaller than TSL’s current global capacity of 32.5 MTPA, including its 19.6 MTPA capacity in India, it is credit positive because it will increase TSL’s long-steel product capacity and increase its reserves of iron ore.
TSL expects to fund the acquisition through a combination of internal accruals and debt.
Complete News Source : Construction Week