All metal companies of Tata Group merged into Tata Steel
- Tata Steel's shares jumped 4.1% to Rs 107.9 after the announcement
- TRF shares were locked in the lower circuit, sliding 5% to Rs 355.65
- Tata Metaliks was down 3.62% to Rs 771.7, while Tata Steel Long Products fell 9.19% to Rs 680
Tata Group's board approved the amalgamation of all of its metal subsidiaries into Tata Steel. According to a BSE filing, the company's board of directors met on Thursday and approved the merger of the seven metal firms into Tata Steel.
Tata Steel Long Products Limited, The Tinplate Company of India Limited, Tata Metaliks Limited, TRF Limited, The Indian Steel & Wire Products Limited, Tata Steel Mining Limited, and S & T Mining Company Limited are the seven companies that will be amalgamated into Tata Steel.
The planned merger will streamline the group's corporate structure by removing multiple companies from the group. It is supposed to result in greater use of shared facilities, the removal of duplication and multiplicity of compliance requirements, and the rationalisation of administrative expenditures, among other things.
The company's management said that the amalgamation will save Rs 700 crore in royalty fees paid to the government.
Tata Steel's shares jumped 4.1% to Rs 107.9 on Friday following the announcement. TRF shares were locked in the lower circuit, sliding 5% to Rs 355.65. Tata Metaliks was down 3.62% to Rs 771.7, while Tata Steel Long Products fell 9.19% to Rs 680.
"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 (as defined in each of the Schemes), (c) SEBI (d) The National Stock Exchange of India Limited and the BSE Limited (hereinafter collectively referred to as “Stock Exchanges”); 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 law", the company said in its filing.
The equity exchange ratio was determined independently for each of the seven companies. Tinplate stockholders will get 33 Tata Steel shares for 10 Tinplate shares. Tata Metaliks stockholders will get 79 shares of Tata Steel for 10 shares of the company. Tata Steel Long shareholders will receive 67 shares of Tata Steel for 10 shares of the company. TRF shareholders will get 17 Tata Steel shares for 10 TRF shares.
Most of the exchange ratio is in line with market prices. TRF shareholders will be the only sufferers, given the stock has risen dramatically in recent weeks.
Tata Steel's consolidated net profit fell by 21% in the first quarter of this financial year (Q1FY23). The standalone net profit fell from Rs 9,112 crore in Q1FY22 to Rs 5,783 crore in Q1FY23. The company's net debt was Rs 54,504 crore, with a net debt to EBITDA ratio of 0.87 and net debt to equity ratio of 0.48.