Tata Steel said that its arm has accepted a letter of award (LoA) for the acquisition of a 93.71 per cent stake in Neelachal Ispat Nigam Ltd (NINL) and added that the process for the buyout is likely to be completed in the next couple of months. On February 2, the Department of Investment and Public Asset Management (DIPAM) issued the LoA to Tata Steel Long Products (TSLP) for the acquisition of the 93.71 per cent equity stake of NINL.
“The company has, today i.e. February 9, 2021, accepted the said letter of award.
“The process for the acquisition of NINL is likely to be completed within the next couple of months in accordance with the timelines announced by DIPAM,” Tata Steel said in a filing to the BSE.
TSLP has been identified as the winner in the bidding process to acquire the 93.71 per cent stake in NINL in accordance with the process run by the DIPAM.
Last month, Tata Steel had announced winning the bid for acquiring the 93.71 per cent stake in Odisha-based NINL for Rs 12,100 crore.
The acquisition of NINL, Tata Steel had said, provides a significant opportunity to not only restart the plant shut since 2020 but also begin work immediately to build a 4.5-million-tonne-per-annum state-of-the-art long products complex in the next few years.
It will also further expand the capacity to 10 million tonnes per annum by around 2030, the company had said.
The acquisition of NINL is critical for Tata Steel to build a dedicated long products complex, which will be positioned to leverage synergies with the shared infrastructure of Tata Steel in the area.
“Tata Steel will leverage its capability in the long products business using its strong brand equity, particularly in the retail construction segment, and its extensive, pan-India retail and distribution network to drive scale and profitability in long products.
“The total consideration of Rs 12,100 crore reflects the enterprise value (including all recorded liabilities) as part of the acquisition of 93.71 per cent equity stake in NINL,” the company statement had said.
The acquisition is being financed through a combination of internal accruals and bridge loans, which are expected to be paid down through the internal generation of Tata Steel over the next few quarters, it had said.