Tata Steel has announced to acquire steel-making facility of the Kolkata-headquartered Usha Martin Ltd (UML) for Rs 4,300-4,700 crore. The process of acquisition is likely to be complete in the next six-to-nine months.
Tata Steel, in a press release, said it has executed definitive agreements for acquisition of the steel business of UML through a slump sale on a going concern basis.
“It is proposed that the steel business of UML will be acquired subject to transaction closing, for a cash consideration of between Rs 4,300-4,700 crore ” the release said. And Company also added that “Acquisition is subject to fulfilment of various conditions under the agreements. All the employees pertaining to the steel business will transfer as part of the acquisition.
The Kolkata-based speciality steel maker UML makes alloy steel long products such as wire rods, bars, blooms and bright bars mostly for commercial vehicles and tractors.
The company on 22nd September said its board approved the sale and transfer of the company’s steel business and the sale would help it in significant reduction of its debt.
UML’s steel business clocked a revenue of Rs 3,441 crore on a standalone basis in the last fiscal, up from 3,055 crore in the previous fiscal.
As on March 31, 2018, Usha Martin’s total debt stood at Rs 4,600 crore. With the selling of its steel-making unit, the company might be able to ‘almost wipe out’ its debt, said Debasish Mallick, deputy managing director, Exim Bank. The bank has an exposure of around Rs 400 crore in UML.