Tata Steel has won the race to acquire the steel business of Usha Martin. The all-cash transaction will see the Tata group firm paying Rs 4,300-4,700 crore, subject to various transaction terms.

At least five companies had expressed interest after Usha Martin, which was reeling under huge debt, decided to hive off the steel business. They had also signed non-disclosure agreements with Usha Martin.

Tata Steel, JSW Steel and Liberty House had emerged as the top contenders for the business. Vedanta and Kalyani Steel had also initially expressed willingness. SBI Caps led the sale process, which was also overseen by a committee of independent directors.

JSW, Tata Steel and Liberty House of the UK are locked in a separate battle to take over Bhushan Power & Steel Ltd (BPSL) through the insolvency process.

Tata Steel on Saturday announced that it has inked definitive agreements for the acquisition of the steel business of Usha Martin through a slump sale on a going concern basis.

Usha Martin’s steel business comprises a specialised one-million-tonne alloy-based manufacturing plant in Jamshedpur, a producing iron-ore mine, a coal mine under development and captive power plants.

While Tata Steel or any of its subsidiaries or affiliates may carry out this acquisition, all the employees of the steel business will be transferred as part of the acquisition.

In a regulatory filing with the stock exchanges, Tata Steel said the acquisition was likely to be completed in 6-9 months.

The Telegraph

The steel business of Usha Martin posted gross revenues of Rs 3,441 crore in 2017-18, up from Rs 3,055 crore in the preceding year.

Usha Martin sources said the valuation of the steel business has been fair. The company will now focus on the wire rope business where it sees more scope.

Tata Steel pointed out that the acquisition was part of its overall strategy to build capability in long products and expand product offerings, including high-value added products. This is its second such successful transaction in recent months after Bhushan Steel.

Earlier, in May, Bamnipal Steel, a wholly owned subsidiary of Tata Steel, had completed the acquisition of a controlling stake of 72.65 per cent in Bhushan Steel. It is also engaged in the expansion of the Kalinganagar steel facility.

The acquisition comes at a time domestic demand for steel is expected to remain strong. One of the segments that has seen a healthy demand is the automobile sector.

During the first quarter ended June 30, the India operations of Tata Steel posted nearly a 14 per cent increase in total revenues at Rs 16,405 crore. Domestic deliveries rose 13.7 per cent over the same period last year, which was higher than the 9.3 per cent overall demand growth in the country.