Tata Steel to obtain BRPL at enterprise value of 900 crore

The Steel giant Tata group has struck a deal to gain 100% equity in Odisha-based Brahmani River Pellets (BRPL) at an enterprise value of 900 crore, even as the Tata group and Cyrus Mistry air their controversy before shareholders and on legal fora.
The contract will be financed through the flagship’s internal cash flows, according to a statement issued on Friday, and assist Tata Steel ramp up its new 3 million tonne steel plant at Kalinganagar.
JSW and few other steel majors had been eyeing BRPL’s assets, which contain a 4-mt pellet plant in Jajpur and a 4.7 mt per annum iron ore beneficiation plant in Barbil joined with a 220-km underground slurry pipeline. When contacted, Vinod Nowal, deputy managing director of JSW Steel added, “We were seriously interested in acquiring BRPL and were on the verge of bagging the deal.”
Tata Steel stated it has signed a definitive agreement with Aryan Mining and Trading Corporation (AMTC) and other firms in the Moorgate Industries Group (MIG has established BRPL) as piece of the deal, which is subject to execution of regulatory approvals and other surrounding.
MIG was founded after a demerger from Stemcor Group of firms as part of a UK court-approved restructuring in 2015 and clasped a significant stake in AMTC.
Analysts tracking the sector claimed the locational advantage made it a ‘best fit’ deal. “At an enterprise value of Rs 900 crore, this is a good acquisition and will help it Tata Steel in the future,” Sanjay Jain, senior vice-president, Motilal Oswal Securities added.
Koushik Chatterjee, Tata Group executive director (finance and corporate) told, “The location of BRPL’s assets frames it strategic to Tata Steel’s Kalinganagar operations and has significant operational synergies to make the plant more competitive. Iron ore from our captive mine in the Joda, Khondbond region will get transferred through the slurry pipeline. This will reduce freight costs significantly.”
Tata Steel also said that the addition was timely since it was ramping up capacity in Odisha. Kalinganagar is anticipated to gain in operating efficiency and minimize costs of blast furnace operations with BRPL. Commissioned in October 2015, the Kalinganagar plant is Tata Steel’s first new integrated steel unit outside of Jamshedpur.

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