Tata Steel joins race for Usha Martin

11 june 2018

Tata Steel has joined the race for Usha Martin’s Jamshedpur facility, which was put on the block to pare some of the parent’s debt.

The Tata group company has put in an aggressive bid of around Rs 6,000 crore.

Others in the fray include JSW Steel. Vedanta Resources, which was till now said to be interested, is said to have withdrawn. But the company did not respond to a query on the development.

“Tata Steel’s bid is aggressive, given that the value of the asset is considerably less,” said a source. Another executive added, “The ideal value is in the region of Rs 3,000-4,000 crore.”

But given that the Usha Martin facility is in its neighbourhood, synergies would come easier for Tata Steel, which also wouldn’t want the competition to develop a presence in its backyard.

Tata Steel’s plant in Jamshedpur manufactures 10 million tonnes of steel a year.

Both JSW Steel and Tata Steel are believed to have signed memorandums of understanding with Usha Martin, which allows them to evaluate the asset.

“Evaluating strategic growth opportunities is an ongoing process in the company,” said a Tata Steel spokesperson in response to a query from Moneycontrol.

The two big private steelmakers have already squared up against each other during the auction of Bhushan Steel and Bhushan Power & Steel.

With many of the steel facilities in the country facing distress and expected to be put on the block, industry observers expect the race between the two biggest private steelmakers to heighten from here on.

High debt

Usha Martin’s integrated steel plant near Jamshedpur has a capacity to manufactures one million tonne a year.

According to the company’s website, it is “one of the India’s largest speciality steel plant in long product segment.”

The plant was set up in 1974, and has access to captive iron ore and coal mines within the state.

The plant caters to clients from sectors such as automotive, heavy earth-moving equipment, and oil and gas. Interestingly, Tata Motors is one of its clients.

The company has a debt of around Rs 3,700 crore, most of which is long-term.

In the last financial year, it brought down its losses to Rs 282 crore, from Rs 354 crore a year earlier. Its revenues in FY18 stood at Rs 4,038 crore, as against Rs 3,246 a year ago. It last reported a profit in FY13.


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