Kolkata: Tata Steel has planned to merge Tinplate Company of India Ltd and Tata Sponge Iron Ltd with itself.
“A company like Tinplate is like an extension of our steel plant. Tata Steel’s cold rolling and coating is done there. But for some historical reasons they have remained as separate companies,” Tata Steel managing director H M Nerurkar said on Thursday.
Such plants remained as divisions the world over, he said citing examples of Nippon Steel and Arcelor Mittal.
Reuters
The proposed integration will allow Tata Steel to “have better control over downstream products and develop a fully integrated chain”, he said.
“From technology to research and development, everything is sourced from the parent. Keeping these companies separate means extra taxes, separate work culture,” he said.
“You might ask why didn’t we do this obvious thing all these years. Its a valid questions. But the fact is we are doing it now,” Nerurkar said, adding it would be done “as soon as possible”.
He was talking to reporters on the sidelines of Indian Institute of Metals AGM where he took over as president for the current year.
Tata Steel currently holds 59.4 percent in Tinplate and just under 40 percent in Tata Sponge.
The world’s sixth largest steel maker has already initiated a process to ramp up its holding in these two companies. It has announced open offers to acquire shares from minority stakeholders, which would result in a higher promoters’ block.
It will spend Rs 87.92 crore to pick up an additional 14 percent stake in Calcutta-based Tata Tinplate if minority shareholders subscribe to the open offer and Rs 65.02 crore for 11.4 percent stake in Tata Sponge.Later, it said the offer would start on August 6 to close on August 22.
Meanwhile Standard and Poor’s on Thursday lowered its outlook on Tata Steel and its UK-based subsidiary Tata Steel UK Holdings to negative from stable, citing continued weak performance.
The ratings agency expects the company’s profit margins to improve when the “company’s India operations receive the full benefit of a recently commissioned three million tonne annual capacity”. These benefits are expected to accrue only in the fiscal year to 31 March 2014, it added.
Agencies
