Tata Steel will merge with itself seven of its subsidiary companies, as per the exchange filing on September 23. The subsidiaries are Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF, Indian Steel & Wire Products, Tata Steel Mining, and S&T Mining Company.
Explaining the rationale behind the amalgamation, Koushik Chatterjee, ED & CFO of Tata Steel, said the decision was strategically logical after successfully merging and integrating of Bhushan Steel.
"All of these companies have a great future. We are looking at procurement synergies, technology synergies, financing synergies, and operating synergies," he told CNBC TV-18 in an exclusive interaction.
"This amalgamation is EPS accretive for Tata Steel," he said.
Chatterjee further added that the amalgamation will lead to a total cost saving of up to Rs 1500 crore, including Rs 700 crore royalty which was paid by Tata Steel to the govt.
Chatterjee highlighted that the subsidiaries were already a part of Tata Steel's consolidated entity.
On the possibility of demerger of Tata Steel's India and overseas business, he clarified that the demerger of India and overseas businesses is not on the table. "We have learned to manage volatility in Europe".
The resources of the merged entity have been pooled to unlock the opportunity for creating shareholders’ value, the company said in a statement.
The Board has approved swap ratios for the proposed amalgamations for the following five companies
- For every 10 shares of Tata Steel Long Products, 67 shares of Tata Steel.
- For every 10 shares of The Tinplate Company of India, 33 shares of Tata Steel.
- For every 10 shares of Tata Metaliks, 79 shares of Tata Steel.- For every 10 shares of TRF, 17 shares of Tata Steel.