NEW DELHI: Moody’s Investors Service on Monday said the acquisition of Neelachal Ispat Nigam Ltd (NINL) by Tata Steel arm is credit positive because it will increase the subsidiary’s long-steel production capacity and its reserves of iron ore.
Last month, Tata Steel had announced winning the bid for acquiring 93.71 per cent stake in Odisha-based NINL for Rs 12,100 crore.
“On January 31, Tata Steel Ltd (TSL, Ba1 stable) announced that its 74 per cent-owned subsidiary Tata Steel Long Products Ltd (TSLP) will acquire a 93.7 per cent stake in Neelachal Ispat Nigam…The acquisition will give TSL access to NINL’s 1.1 million tonnes per annum (MTPA) of long-steel producing capacity, 100 million tonnes of iron ore reserves and 2,500 acres of land,” Moody’s Investors Service said in a statement.
Still, NINL is loss-making and Moody’s Investors Service said that it believes that the acquisition price largely reflects the steel plant, iron ore reserves and the land acreage that can accommodate capacity expansions.
And, while the acquired operations are substantially smaller than TSL’s current global capacity of 32.5 MTPA, including its 19.6 MTPA capacity in India, it is credit positive because it will increase TSL’s long-steel product capacity and increase its reserves of iron ore. —PTI

KR Desk