Tata Steel has said its board of directors has approved the amalgamation of all metal companies of the Tata group into it. There are seven metal companies that will be merged with Tata Steel — Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF, The Indian Steel & Wire Products, Tata Steel Mining, and S&T Mining Company.
The merger is subject to regulatory and other approvals. “Each scheme is subject to the receipt of approval from the (a) requisite majority of the shareholders of the respective transferor companies and transferee company; (b) competent authority, (c) SEBI (d) National Stock Exchange of India and the BSE; and (e) such other approvals, permissions and sanctions of regulatory and other statutory or governmental authorities / quasi-judicial authorities, as may be necessary as per applicable laws,” according to a BSE filing.
It added that each merger scheme was reviewed and recommended to the board by the committee of independent directors and the audit committee of the company.
Tata Steel in the BSE filing said the transaction would fall within the purview of related-party transactions as defined under the listing regulations. TSLP is a listed subsidiary company of the company. “However, the transaction shall not attract the requirements of Section 188 of the Companies Act, 2013 pursuant to the clarifications provided in General Circular No. 30/2014 dated July 17, 2014 issued by the Ministry of Corporate Affairs.”
Explaining the rationale of the merger, Tata Steel said, “The amalgamation will consolidate the business of TSLP and transferee company which will result in focused growth, operational efficiencies, and business synergies. In addition, resulting corporate holding structure will bring enhanced agility to business ecosystem of the merged entity.”
Tata Steel is a leading global steel company, with over 100 years of experience in the steel sector and is a pioneer of steel manufacturing in India. TSLP is in the business of production and marketing of sponge iron, which is a single end use (steel making) and a single grade product. It has also one of the largest specialty steel plants in India in the special bar quality segment.
Shares of Tata Steel were on Friday trading at Rs 105.20 apiece on the BSE at 12:04 pm (IST), which was 1.5 per cent higher as compared with the previous close. However, the shares of the companies to be merged declined by up to 9 per cent. Tata Steel Long Products was trading lower by 8.87 per cent at Rs 682.45 apiece.