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Merger of seven entities with Tata Steel will allow simplification of management and help with sharper focus on the business, Koushik Chatterjee, CFO of the steel giant, said.
On Friday, the board of Tata Steel approved the amalgamation of its seven subsidiaries -- Tata Steel Long Products, Tata Metaliks, The Tinplate Company of India, TRF Limited, Indian Steel & Wire Products, Tata Steel Mining and S&T Mining -- into itself.
"We have been driving simplification across Tata Steel for some time. The objective is to consolidate the subsidiary businesses within Tata Steel to drive simplification of management and also have a sharper focus on the business," Chatterjee told PTI.
After successfully integrating Bhushan Steel, which was much larger and more complex, this was the next natural step, the official who is also an executive director of Tata Steel, said.
In 2018, Tata Steel through its wholly-owned subsidiary Bamnipal Steel Ltd (BNPL) completed the acquisition of controlling stake of 72.65 per cent in Bhushan Steel Ltd (BSL).
Tata Steel Ltd had won the bid to acquire debt-laden Bhushan Steel in an auction under the insolvency process.
On the merger, the company official further said: "The net present value of all synergies will be over Rs 1,000 crore, which is a material value unlocking potential. This covers benefits on cost takeouts, leveraging the synergies on procurement, commercial and financing synergies."
All the businesses of the amalgamating companies have a good future. These businesses are part of Tata Steel's enterprise strategy and the company has much more flexibility to grow some of these businesses faster, he said.
According to Tata Steel, the merger is also part of its continuing journey to simplify the group holding structure.
Since 2019 Tata Steel has reduced 116 associated entities (72 subsidiaries have ceased to exist, 20 associates and joint ventures have been eliminated and 24 companies are currently under liquidation).
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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First Published: Sun, September 25 2022. 13:39 IST