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Acquisition: Equity Shares of Tata Sponge Iron Ltd

RNS Announcement

RNS Number : 7668G

Tata Steel Limited

25 July 2019

July 25, 2019

The Secretary, Listing Department

BSE Limited

Phiroze Jeejeebhoy Towers,

Dalal Street,

Mumbai - 400 001, India

The Manager, Listing Department

National Stock Exchange of India Limited

Exchange Plaza, 5^th Floor, Plot C/1

G Block, Bandra Kurla Complex, Bandra East

Mumbai - 400 051, India

Scrip Code: 500470/890144

Scrip Code: TATASTEEL/TATASTEELPP

Dear Madam, Sir,

Sub: Acquisition of 2,58,43,967 equity shares of Tata Sponge Iron Limited (the "Rights Equity Shares") at an issue price of ₹500/- per Rights Equity Share aggregating to ₹1,292.20 crore by Tata Steel Limited (the "Company") on rights basis on July 24, 2019(the "Rights Issue")

This is to inform you that the Company has on July 24, 2019, subscribed to 2,58,43,967 Rights Equity Shares of Tata Sponge Iron Limited at an issue price of ₹500/- per Rights Equity Share (including a premium of ₹490/- per Rights Equity Share) aggregating to ₹1,292.20 crore.

The details of the transaction are given in Annexure A.

This is for your information and records.

This disclosure is made in compliance with Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended.

ANNEXURE A

Particulars

Details

Name of the target entity, details in brief such as size, turnover etc.

Tata Sponge Iron Limited ('TSIL')

TSIL is one of India's largest merchant sponge iron manufacturers. TSIL is engaged in the manufacture and sale of sponge iron using the [TDR] technology. TSIL also engages in the generation and sale of power by utilizing the waste heat emanating from the sponge iron production process. TSIL has taken over Usha Martin - Steel Business unit on April 9, 2019, which is an Integrated Steel Plant to manufacture alloyed speciality steel in long products segments like Wire Rods and Bars.

The turnover of TSIL for FY 2018-19 is ₹992.05 crore.

Whether the acquisition would fall within related party transaction(s) and whether the promoter/ promoter group/ group companies have any interest in the entity being acquired?

If yes, nature of interest and details thereof and whether the same is done at "arm's length"

This is not a related party transaction as it is a subscription to equity shares of TSIL pursuant to TSIL's Rights Issue and does not involve any sale/purchase of shares.

TSIL, is a subsidiary of the Company and has allotted the Rights Equity Shares to the Company pursuant to the Rights Issue. The allotment is in compliance with the applicable laws.

Industry to which the entity being acquired belongs

Manufacturing of sponge iron and steel products.

Objects and effects of acquisition (including but not limited to, disclosure of reasons for acquisition of target entity, if its business is outside the main line of business of the listed entity)

TSIL announced the Rights Issue with the primary objective of repaying or pre-paying or redeeming the debt of TSIL and for general corporate purposes. The Company, being a promoter company of TSIL supports this objective and accordingly subscribed to the Rights Issue.

Brief details of any governmental or regulatory approvals required for the acquisition

Indicative time period for completion of the acquisition

The acquisition has been completed on July 24, 2019 when the Company acquired the Rights Equity Shares at an issue price of ₹500/- per Rights Equity Share (including a premium of ₹490/- per Rights Equity Share) aggregating to ₹1,292.20 crore.

Nature of consideration - whether cash consideration or share swap and details of the same

Cash

Cost of acquisition or the price at which the shares are acquired

The Rights Equity Shares have been acquired at an issue price of ₹500 per Rights Equity Share (including a premium of ₹490/- per Rights Equity Share) aggregating to ₹1,292.20 crore

Percentage of shareholding / control acquired and / or number of shares acquired

Number & % of share holding before acquisition

Number & % of share holding after acquisition

Equity Shares of face value of ₹10/- each

83,93,554 equity shares of TSIL representing

54.50% of the share capital of TSIL

3,42,37,521 equity shares of TSIL representing 75.91% of the share capital of TSIL*

*As per the relaxation granted by the Securities and Exchange Board of India vide its letter dated May 24, 2019.

10.

Brief background about the entity acquired in terms of products/line of business acquired, date of incorporation, history of last 3 years turnover, country in which the acquired entity has presence and any other significant information (in brief)

TSIL, incorporated on July 31, 1982, is one of India's largest merchant sponge iron manufacturers. It also manufactures steel products and is engaged in the sale of power generated from the waste heat emanating from sponge iron production process.

TSIL with its manufacturing plant in Joda, Odisha, is located near India's richest iron ore reserves and is well connected with roadways and railways, enabling it to seamlessly cater to different stakeholders.

Through its sponge iron business, TSIL primarily caters to the metallic requirements of steel producers in select geographies. With the recent acquisition of the steel business of Usha Martin Limited on April 9, 2019, TSIL has also entered the domain of steel manufacturing with focus on long products, including special and alloy steels.

As of March 31, 2019, TSIL's production capacity is as follows:

Sponge iron - 3,90,000 Tonnes per annum

Power generation - 26 MW

Crude Steel - 1 Million Tonne per annum

TSIL's turnover for last three consecutive years are as below:

· FY 2018-19 Revenue: ₹992.05 crore

· FY 2017-18 Revenue: ₹816.65 crore

· FY 2016-17 Revenue: ₹615.16 crore

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END

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RNS metadata

Title: Acquisition: Equity Shares of Tata Sponge Iron Ltd
Time: 16:25:28
Date: 25 Jul 2019
Category: Acquisitions and alliances
ID: 7668G