Tata Steel merges subsidiaries for greater efficiency; here is the exchange rate

Tata Steel’s Board of Directors has approved the merger of strategic businesses into the company as part of its efforts to generate synergies, simplify the group’s ownership and management structure, consolidate and strategically develop downstream operations and engineering capabilities.

According to a statement released by the steel major, the subsidiaries are all majority-owned by Tata Steel and include Tata Steel Long Products (74.91 percent stake), The Tinplate Company of India (74.96 percent), Tata Metaliks ( 60.03 percent), The Indian Steel & Wire Products (95.01 percent), Tata Steel Mining Limited and S&T Mining Company Limited (both wholly owned subsidiaries).

Tata Steel’s board also approved the merger of TRF (34.11%) with Tata Steel.

In addition, based on the reports of the independent appraisers, the board approved the swap ratios for the proposed mergers as follows:

  • For 10 shares of Tata Steel Long Products, 67 shares of Tata Steel
  • For 10 shares of The Tinplate Company of India, 33 shares of Tata Steel
  • For 10 shares of Tata Metaliks, 79 shares of Tata Steel
  • For 10 shares of TRF, 17 shares of Tata Steel

Interestingly, stocks of publicly traded subsidiaries have seen a strong rise over the past month, even as the benchmark Sensex Index rose 0.7%. Over the past month, shares of Tata Steel Long Products have risen from Rs 605 to Rs 749 while those of The Tinplate Company of India have risen from Rs 295 to Rs 338. Shares of Tata Metaliks have risen from Rs 715 to Rs 801.

“The proposed mergers will improve management efficiency, lead to sharper strategic direction and improve agility across businesses based on the strong parental support of Tata Steel’s management,” a statement from Tata Steel said. .

“In line with Tata Steel’s long-term strategy, the consolidation of downstream operations will enable growth in value-added segments by leveraging Tata Steel’s nationwide marketing and sales network. The mergers will also generate synergies through raw material security, centralized sourcing, inventory optimization, reduced logistics costs and better utilization of facilities,” he added.

In the end, there will be further opportunities to reduce corporate overhead and costs and each of the proposed mergers will create shareholder value, he said.

Incidentally, the proposed merger is also part of Tata Steel’s ongoing journey to simplify the group’s holding structure. Since 2019, Tata Steel has reduced 116 associated entities (72 subsidiaries have ceased to exist, 20 associates and JVs have been eliminated and 24 companies are currently in liquidation).

Tata Steel, together with its subsidiaries, associates and joint ventures, is spread across five continents and has over 65,000 employees.

The major Indian listed company is also among the world’s leading steel companies with an annual crude steel capacity of 34 million tons per year. The group recorded consolidated revenue of $32.83 billion in the fiscal year ended March 31, 2022.

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Sallie R. Loera