InvestorQ : How does Tata Long Products plan to leverage the acquisition of Neelachal Ispat?
swati Bakhda made post

How does Tata Long Products plan to leverage the acquisition of Neelachal Ispat?

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Sam Eswaran answered.
1 month ago
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Tata Steel Long Products Ltd completed the acquisition of Neelachal Ispat Nigam as part of the strategic divestment. Tata Steel Long Products paid a total consideration of Rs12,100 crore for acquiring full control of Neelachal Ispat. The capacity addition brought about by Neelachal, will have direct synergies with the Tata Steel model. Like in any typical strategic divestment, the government not only passes on the full ownership but also full management control over the company and its key resources for efficient utilization.

Neelachal Ispat is now part of the Tata Steel Long Products umbrella. The deal was consummated with the transfer of 93.71% shares of all joint venture partners to Tata Steel Long Products. Neelachal Ispat is proportionately owned by MMTC (49.78%), NMDC (10.10%), BHEL (0.68%), MECON Ltd (0.68%), Odisha Mining (20.47%) and Industrial Promotion Corp. of Odisha (12%). A small portion of the stake is held by banks and insurance companies. The company was valued at full enterprise value of Rs12,100 crore.

Tata Steel Long Products managed to outbid a consortium of Jindal Steel and Power, Nalwa Steel and Power and JSW Steel; all part of the Jindal group. Along with ownership in the company, the Tata group company also gets the transfer of mining rights and leasehold rights of lands held by Neelachal. This should make the deal more valuable to the acquirer. Tatas will be able to restart the 1 MTPA steel plant and work to build 4.5 MTPA plant. The Neelachal plant is currently located at Kalinganagar, Odisha.

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