Tata Steel acquires Brahmani River Pellets at Rs 900 cr EV

Tata Steel Limited said that it has executed definitive agreements to acquire 100% equity shares of Brahmani River Pellets Limited (BRPL) from Aryan Mining and Trading Corpn Private Limited (AMTC) and other companies in the Moorgate Industries Group (MIG).

The transaction is based on an enterprise value of Rs. 900 crores plus closing adjustments and is subject to completion of certain condition precedents including regulatory approvals. The funding for the acquisition will be done from internal cash flows of Tata Steel.

The company did not specify how much it was paying. Enterprise value is equal to the total claims on the company by way of credit, equity etc.. The actual amount paid will be far smaller.

BRPL was originally established by MIG, which continues to hold a significant stake in BRPL through its shareholding in AMTC. MIG was formed on demerger from Stemcor Group of Companies as part of a UK court-approved restructuring in 2015.

BRPL owns a 4 mtpa Pellet plant in Jajpur, Odisha and 4.7mtpa iron ore beneficiation plant in Barbil, Odisha connected through a ~220 KM underground slurry pipeline.

Koushik Chatterjee, Group Executive Director (Finance & Corporate) and member of the Tata Steel Board said “The location of the BRPL assets makes this very strategic to Tata Steel especially to our Kalinganagar operations and has significant operating synergies to make our Kalinganagar plant even more competitive for the future. The iron ore from our captive mine in the Joda and Khondbond region will get transferred in future through the slurry pipeline and reduce freight costs significantly apart from the 4 mtpa pellet plant & other infrastructure which will enhance the operating efficiency and reduce costs of blast furnace operations in Kalinganagar. To build a similar facility would have taken significant time and costs and therefore, this acquisition is very timely as we are looking to ramp up the capacity of the Phase 1 at Kalinganagar. This is also a demonstration of our commitment to the State and people of Odisha.”

Tata Steel Group stands among the top global steel companies with an annual crude steel capacity of 28 million tonnes per annum (MnTPA) and a turnover of US $17.69 billion in FY16. It is the world’s second-most geographically-diversified steel producer, with operations in 26 countries and commercial presence in over 50 countries.