Tata Sponge, a subsidiary of Tata Steel, has reportedly closed a deal to acquire the steel business of Usha Martin Ltd for around Rs 4,600 crore, a media report said.
According to The Economic Times, Tata Steel will take possession of Usha Martin's steel unit at Jamshedpur on Tuesday. The report added that the proceeds from the deal will be kept in an escrow account of SBI and will be utilised to repay Usha Martin's debt.
Usha Martin has a debt of around Rs 4,400 crore. The steel business that Usha Martin is selling to Tata Sponge includes a 135 MW power plant and a lucrative iron ore mine and coal block, The Times of India said.
Shares of Usha Martin fell over 7 percent on Tuesday on the back of reports that Tata Steel is to take over the company's Jamshedpur steel plant.
At 2.35 pm Usha Martin was quoting Rs 37.45, down 7.87 percent on the BSE.
In September 2018, Tata Steel announced it would acquire the steel business of Usha Martin Ltd. The sale of steel business to Tata Steel will help the company in “significant reduction" of its debt, Usha Martin had said.
Last week, Tata Steel said its output rose 23 percent to 7.70 million tonne (MT) during the last quarter of 2018-19.
The company had produced 6.26 MT of steel during the same quarter a year ago, Tata Steel said in a statement. Its India production stood at 4.47 MT during the January-March 2019 quarter as against 3.07 MT in the year-ago period.
"India operations achieved the highest ever crude steel production in 4QFY19 driven by better plant availability across the locations including ramp-up at Tata Steel BSL," it said.
In May 2018, Bamnipal Steel (BNPL), a wholly-owned subsidiary of Tata Steel, had completed the acquisition of controlling stake of 72.65 percent in Bhushan Steel. Tata Steel Ltd had won the bid to acquire debt-laden Bhushan Steel Ltd (BSL) in an insolvency auction. The bankrupt firm was among the 12 stressed assets the RBI had referred for NCLT proceedings last year.
Tata Steel Group is among the top global steel companies with an annual crude steel capacity of 33 million tonnes per annum (MTPA).
With PTI inputs
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Updated Date: Apr 09, 2019 14:56:40 IST