Tata Steel to merge 7 subsidiaries by FY24, says CEO Narendran
Tata Steel, one of the leading steel manufacturers in India, expects to complete the merger of its seven subsidiaries by the financial year 2023-2024, said CEO and managing director TV Narendran. The proposal to merge 6 subsidiaries was approved by the Tata Steel board in 2022. The merger of Angul Energy was announced recently.
Speaking with PTI, Narendran said that the completion of the merger will depend on the regulatory processes including obtaining clearances from National Company Law Tribunal (NCLT). After the receipt of these regulatory approvals, the merger process is expected to be completed in the next financial year.
This merger will help Tata Steel achieve higher synergies and efficiencies while also helping in reducing costs. The merger is also said to help unlock value for Tata Steel and help the company integrate and optimize the mine-to-consumer business.
Currently, the companies that will be merged with Tata Steel are as follows:
· Tata Steel Long Products (TSPL)
· Tinplate Company of India
· Tata Metaliks
· Indian Steel and Wire Products
· Tata Steel Mining
· S&T Mining Company
· Angul Energy
In July 2022, Tata Steel Long Products (TSPL) completed the acquisition of Neelachal Ispat Nigam Limited (NINL). There are no immediate plans to merge the newly acquired company into Tata Steel. Since the company was acquired from a government entity, Tata Steel is contracted to run the company as a separate legal entity for at least 3 years before merging the subsidiary.
The acquisition of NINL is said to help the company boost its revenues as the production operations have begun and are being steadily increased to achieve production of 1 million tonnes per annum.
The current focus of Tata Steel is to merge the existing 7 subsidiaries before merging additional companies. The speed at which the merging process is completed depends on how quickly the regulatory requirements are met and approved.
On February 6, 2023, Tata Steel announced its earnings for the third quarter ended December 2022. The company reported a surprise consolidated net loss of Rs 2,224 crore in Q3FY23 compared to a profit of Rs 1,514 crore in the previous quarter and a profit of Rs 9,572 crore in the same quarter last year. This was mainly due to a sharp drop in realisations and spreads in Europe.
The steel maker’s revenue from operations declined 6% YoY to Rs 57,084 crore in the quarter under review. Consolidated EBITDA was at Rs 4,154 crore and EBITDA margin at 7%.
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