Steel major Tata Steel Ltd on Friday announced a mega merger of listed and unlisted companies mainly to derive business synergies and also to reduce and simplify the Tata Group's steel business structure.
Tata Steel's Board on Friday approved the amalgamation of seven group companies with the former.
The merging seven companies are: 1. Tata Steel Long Products Limited, A2. The Tinplate Company of India Limited, 3. Tata Metaliks Limited, 4. TRF Limited, 5. The Indian Steel & Wire Products Limited, 6. Tata Steel Mining Limited and 7. S & T Mining Company Limited.
The company wise share exchange ratios and the rational are as follows:
1. Tata Steel Long Products Limited - Listed
Tata Steel Long is in the business of production and marketing of sponge iron, which is a single end use (steel making) and a single grade product.
The amalgamation will consolidate the business of Tata Steel Long and Tata Steel resulting Ain focused growth, operational efficiencies, and business synergies.
In addition, resulting corporate holding structure will bring enhanced agility to business ecosystem of the merged entity
Share exchange ratio: As per of the amalgamation scheme, Tata Steel will issue 67 fully paid shares of Re.1 each to shareholders of Tata Steel Long (except Tata Steel) for every 10 fully paid up equity shares of Rs 10 each.
2. The Tinplate Company of India Limited - Listed
A subsidiary of Tata Steel, The Tinplate Company is engaged in the manufacture of tinplate and tinplate related products which is a value-added product of hot rolled coil.
The amalgamation will consolidate the business of The Tinplate Company and Tata Steel which will result in focused growth, operational efficiencies, and enhance business synergies.
Tata Steel believes that the resources of the merged entity can be pooled to unlock the opportunity for creating shareholder value.
Share exchange ratio: 33 shares of Tata Steel for every 10 shares of Rs 10 each for shareholders of The Tinplate Company.
3. Tata Metaliks Limited - Listed
The Tata Metaliks is a subsidiary company of Tata Steel, manufacturing and selling of pig iron and ductile iron pipes and its allied accessories.
Share exchange ratio: 70 shares of Tata Steel for every 10 shares held by Tata Metaliks shareholders.
4. TRF Limited - Listed
The TRF is primarily engaged in the business of undertaking turnkey projects of material handling for the infrastructure sector and also in production of such material handling equipments.
Share exchange ratio: 17 shares of Tata Steel for every 10 shares of TRF Ltd held by its shareholders.
5. The Indian Steel & Wire Products Limited (Unlisted)
The company is primarily engaged in the business of manufacture of wire rods, TMT rebars, wires and wire products as an external processing agent of the Tata Steel and manufacturing and direct marketing of welding products, nails, rolls and castings.
Share exchange ratio: Cash of Rs.426 per share of Rs.10 held by shareholders of The Indian Steel & Wire.
6. Tata Steel Mining Limited (Unlisted)
Tata Steel Mining, a wholly owned subsidiary of Tata Steel, has its presence in the manufacture of ferro chrome.
Further, through its successful acquisition of Rohit Ferro Tech Limited under Insolvency and Bankruptcy Code, 2016, it has its manufacturing facility in Jajpur, Odisha and Bishnupur, West Bengal.
Along with manufacturing of Ferro Chrome, Tata Steel Mining has also pursued the commercial mining of Chrome ore and iron ore and have executed mining leases for three Chromite blocks viz. Sukinda, Saruabil and Kamarda in Jajpur District, Odisha and is awaiting execution of mining lease for an iron ore block located at Gandhalpada in Keonjhar District, Odisha.
Share exchange ratio: On amalgamation, the entire paid up share capital of Tata Steel Mining will get cancelled.
7. S & T Mining Company Limited (Unlisted)
Another wholly owned subsidiary of Tata Steel, the S & T Mining was engaged, inter alia, in the business of acquiring coal blocks, carrying out exploration, development of mine, extraction and mining of coal from the identified blocks.
However, S & T Mining has been non-operational since FY 2018-19.
Share exchange ratio: Upon amalgamation, the entire paid up capital of S & T Mining will stand cancelled.
According to Tata Steel, each scheme is subject to regulatory approvals.