• Tata Steel limited will amalgamate seven companies
• The merger will combine the businesses of all the seven transferor companies and Tata Steel which is the Transferee Company, resulting in focused growth, operational efficiencies, and business synergies
• proposed merger will result in a simpler management structure, better administration, and a reduction in administrative and operational costs

Tata Group steel portfolio is undergoing massive structuring to simplify the group structures. Seven of its key portfolio metal companies will be amalgamating with Tata Steel Limited (TSL). Under the scheme Tata Steel limited will amalgamate seven companies including Tata Steel Long Products Limited (TSPL), Tinplate Company (TCIL), Tata Metaliks (TML), TRF Limited (TRF), Indian Steel & Wire Products (ISWP), Tata Steel Mining Limited (TSML), S & T Mining Company.

Many of these are listed subsidiaries of the Company, and the transaction would be classified as a related party transaction under the Listing Regulations. TSL has Net Asset of Rs 1,25,433.76 Crores and Revenue from operations Rs 1,29,021.35 Crores. TSLP has Net Asset of Rs 3,200.47 Crores and Revenue from operations Rs 6,801.63 Crores. TCIL has Net Asset of Rs 1170.97 Crores and Revenue from operations Rs 4249.51 Crores.TML has Net Asset of Rs 1525.57 Crores and Revenue from operations Rs 2745.53 Crores. TRF has Negative Net Asset of Rs (289.52) Crores and Revenue from operations Rs 127.14 Crores. ISWP has Net Asset of Rs 142.05 Crores and Revenue from operations Rs 354.15 Crores. ISML has Net Asset of Rs 77.36 Crores and Revenue from operations Rs 4605.38 Crores. S&T Mining has Net Asset of Rs 0.77 Crores and Revenue from operations Nil.

The Scheme’s consideration will be discharged on a ‘arm’s length’ basis. The Scheme’s share exchange ratio is based on a valuation report issued by Registered Valuer. The fairness opinion has been provided by Ernst & Young Merchant Banking Services LLP.

The merger will combine the businesses of all the seven transferor companies and Tata Steel which is the Transferee Company, resulting in focused growth, operational efficiencies, and business synergies. Furthermore, the resulting corporate holding structure will improve the merged entity’s business ecosystem’s agility.

The goal of restructuring is to drive synergies and simplify the holding structure at the group level. The Scheme would result in a streamlined group structure by reducing the number of legal entities in the group structure, significantly reducing the multiplicity of legal and regulatory compliance requirements and costs, improving business oversight, and eliminating duplicative communication and coordination efforts across multiple entities.

Over time, the proposed merger will result in a simpler management structure, better administration, and a reduction in administrative and operational costs. It will enable the reduction of operational costs through the transfer of intermediary products between companies, improved order loads, sales and production planning synergies across the business.

Through common inventory management, centralised sourcing would result in procurement synergies and a reduction in stores/spares. The proposed merger would also result in the sharing of best practises, cross-functional learnings, better utilisation of common facilities, and improved debt and cash management efficiencies.

Analyst and brokerages are bullish on the transaction and according to various Analyst Tata Steel would end up saving an estimated ₹750-800 crore annually due to the merger

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