Tata Steel Ltd. on Friday entered into a definitive agreement to acquire Brahmani River Pellets Ltd. for Rs 900 crore. The steelmaker will be buy out existing shareholders Aryan Mining and Trading Corporation Private Ltd. and Moorgate Industries Group in an all-cash deal, and hopes to complete the transaction in four months, according to a stock exchange filing.
The acquisition provides an upstream integration opportunity to Tata Steel to meet its metallic requirements and improving the feed mix for its Kalinganagar steel plant and Jamshedpur steel plant.Tata Steel's Stock Exchange Filing
BRPL had a revenue of Rs 452 crore in the last financial year, and owns two iron ore plants, according to the company's website.
- A 4 million tonnes per annum pellet plant in Jajpur, Odisha
- A 4.7 million tonnes per annum iron ore beneficiation plant in Barbil, Odisha and;
- A 218 kilometre long slurry pipeline which connects the two plants mentioned above.
The pellet plant is located inside the Kalinganagar Industrial Area, which also houses one of Tata Steel's two integrated steel plants in India. The Kalinganagar plant had started commercial production in May 2016.
The location of BRPL's assets make strategic sense for Tata Steel, which plans to reduce its freight cost by using BRPL's slurry pipeline to transfer iron ore from its captive mine in the Joda and Khondbond region, finance and corporate director of the company Koushik Chatterjee said in a media statement.
It will also enhance operational efficiency and reduce the cost of blast furnace operations in the Kalinganagar facility of Tata Steel, he added.
To build a similar facility would've taken significant time and costs and therefore, this acquisition is very timely as we are looking to ramp up the capacity of the Phase 1 at Kalinganagar.Koushik Chatterjee, Executive Director-Finance & Corporate, Tata Steel
The acquisition is subject to approvals from the Reserve Bank of India and other regulatory bodies.
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