Detail break-up is as follows: Table 1: Resolution Plan Break-Up (All Figs in Lacs). New Delhi: Tata Steel on Saturday announced it had completed the acquisition of debt-ridden Bhushan Energy Ltd. Currently, Tata Steel has an operational capacity of 13 MTPA and the board has approved a brownfield expansion of another 18 MTPA. >> Interest cost is very less in TSL as compare to TBSL which cleaned its balance sheet through IBC route. << 8 0 obj TSL has an annual crude steel production capacity of 27.5 million tonnes per annum (mtpa) with 13 mtpa of crude steel capacity in India and the remaining capacity mainly in Europe and South-East Asia. The acquiring entity would be called TBSL. 2,425.57 crore were redeemed for a total sum of Rs. Your session has expired, please login again. However, the proposed acquisition seems to have been factored in the stock price of Tata Steel already, as seen from the relatively muted reaction of its stock prices. It'll just take a moment. Looks like you have exceeded the limit to bookmark the image. Merger will help in better management and effective utilisation of resources, reorganising TBSL sales and marketing with distribution channel of TSL. 9 0 obj Problem solving with AR: How retailers can use AR to close more sales. Operational creditors are to be paid Rs. steel, cement, metal companies) get revived similarly and in the process productive assets and infrastructure are not required to be dismantled and sold in open for recovery. In case you cant find any email from our side, please check the spam folder. There was no extinguishment of share capital of existing promoters of the company, as usually happens in the other resolution plans, they are still holding shares in the company, now classified in the public category. The Serious Fraud Investigation Office (SFIO) probe suggests that due to promoters siphoning off funds, the company's financial health deteriorated and the company went into insolvency with outstanding liabilities of Rs 56,000 crore. As a next step, it is getting merged with Tata Steel Ltd giving big opportunities to all the stakeholders to become part of one of the largest steel producer and get returns. << That could rise to 23 MTPA with the acquisition. Both companies are engaged in the business of manufacture and sale of steel and steel products and such restructuring will lead to simplification of group structure by eliminating multiple companies in similar business. And hence the idea of greenfield project was out of frame. 100 crores which is paid over and above 35,100 crores, **Updated list of creditors not available, we have re-calculated the total liabilities based on information available, Table 3: Repayment Operational Creditors (including Statutory Liabilities) Insolvency Resolution Plan. The bridge loan availed by BNL is expected to be replaced by debt raised at BSL over time. Table 2: Comparison of Similar Acquisitions. 12 0 obj Bhushan Energy was a subsidiary of Bhushan Steel Ltd, which was also taken over by Tata Steel last year in May, and later renamed as Tata Steel BSL Ltd. Tata Steel had offered 35,200 crore in cash to acquire Bhushan Steel, besides 1,200 crore to creditors and convert the remaining debt owed to banks to equity. Improved primary on account of exceptional gains (compared to exceptional losses in FY18), higher operational profits and reduced depreciation and finance cost. At present, BNL does not have any operations. ii. Further with effect from AY 2018-19 (FY 2017-18), in case of a company, against whom an application for CIRP has been admitted by the adjudicating authority under the IBC, the amount of total loss brought forward (including unabsorbed depreciation) shall be allowed to be reduced from the book profit for the purposes of levy of MAT under section 115JB of the Act,. With the objective to synergize manufacturing, commercials, network optimization, procurement, and S&GA of Bhushan Steel, Tata Steel had overpaid for this stressed asset. The cookies is used to store the user consent for the cookies in the category "Necessary". Facebook investors join backlash against Zuckerberg.

Necessary cookies are absolutely essential for the website to function properly. This is the case of acquisition and amalgamation both in the steel industry. Also, Bhushan Steel, which is mainly into the production and supply of flat steel products, has been a long-term supplier to renowned manufacturers in the automobile sector such as Maruti Suzuki, Tata Motors, Honda Cars, Mahindra & Mahindra and Ashok Leyland. But, it believes that Tata Steels bid for Bhushan Steel is on the higher side compared to other competitors bid. But Tata Steel, which acquired the company through the insolvency resolution process, has turned around it in just two financial years, despite the economic troubles inflicted by COVID-19. We tried to dive into the impact of the resolution plan to the financial, other stakeholders and other aspects through this article.

TSBSL has leveraged synergy with Tata Steel.

Gain arising out of redemption was recorded as exceptional item in the financial results for the year ended March 31, 2019. The move was aligned towards Edelweisss Larsen and Turbo Limiteds hostile acquisition of controlling stake in Mindtree Limited was nothing short of a roller coaster ride. Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. Consolidation will also give TSL access to high-quality assets of TBSL such as widest cold rolling mill in India and complementary product portfolio with value-added products and presence in western India. Auto steel, a high margin segment is around 20-25 per cent of the total Tata Steel revenues and with Bhushans acquisition, it could go up significantly. Leveraging synergies included increasing use of captive raw material, combined cargo planning (inbound and outbound), inter-plant synergies, and manufacturing of Tata Steel branded products at Tata Steel BSL plants at arm's length. Upon the Scheme becoming effective, the Transferor Companies (BNL and TBSL) shall stand dissolved without being wound up without any further act or deed. As one of the largest integrated steel players in India, the company was a source for a vivid variety of products in its portfolio. /BM /Normal Pursuant to the Resolution Plan, BNL subscribed to 72.65% of the equity share capital of TBSL for an aggregate amount of Rs 158.89 crore and provided additional funds aggregating to Rs 35,073.69 crore to TBSL by way of debt/convertible debt. 4,700. Due to CIRP process, valuable and productive assets could be saved and various stakeholders including employees continued to be gained fully employed. Since acquisition, TSBSL has spent around Rs 400 crore in capex towards the safety, environment and sustenance projects. Despite continuing losses, Tata Steel had taken this plunge into an abyss of uncertainty and speculation by acquiring a debt-laden domestic steel company for USD5 billion. Thanks to the strong financial performance, the share price of TSBSL almost doubled to Rs 103 in the last one month, following the result for March quarter and FY21. Improved primarily on account of higher operating profits and reduction of finance cost on account of reduction in external borrowings.

3,929 crore based on weighted average of market price and discounted cash flow method and value attributable to public shareholder is approx. The once bankrupt firm has a market capitalisation of over Rs 10,000 crore at present. 87.48 / share to Rs. The equity shares are listed on BSE and on NSE. ALSO READ: Tata Motors FY21 net loss widens to Rs 13,395 crore; revenue slips. We would love to answer. According to research from Emkay Global, Bhushan Steel can generate EBITDA (earnings before interest, tax and epreciation) of Rs 50-60 billion. "This disclosure is made in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015," the filing said. Bamnipal Steel Limited (BNL) is a public limited company incorporated on January 19, 2018 formed as an SPV (Special Purpose Vehicle), wholly owned subsidiary of TSL, in order to facilitate the acquisition of Tata Steel BSL Limited (TBSL) by way of the corporate insolvency resolution process (CIRP) prescribed under the Insolvency and Bankruptcy Code, 2016 (IBC Code). >> /Type /ExtGState Tata Steel made a Rs 45,400-crore bid for distressed steel company, Bhushan Steel, which is undergoing proceedings under the Insolvency and Bankruptcy Code (IBC). The news of Tata Steels winning bid for Bhushan Steel sent the shares of the latter soaring by over 12 per cent on Thursday. The equity shares held by the Company in Bamnipal Steel shall also stand cancelled. The acquisition is financed by combination of external bridge loan of Rs 16,500 crore availed by BNL and balance through investment by Tata Steel in BNL. It had also optimised operating cost and working capital, besides enriching product mix. The cycle has seen a severe downturn in 2015-16 due to demand slowdown and predatory pricing strategies from a country like China. Break-up is as follows: There was no tax implication on the transaction reported in the Mar-19 balance sheet for resolution plan impact. Bhushan steel was one of the few resolved amongst 12 companies recommended by RBI under Insolvency and Bankruptcy Code. This cookie is set by GDPR Cookie Consent plugin. Merger will be tax natural as per the provisions of section 2(1 B) of Income Tax Act, 1961. BNL was incorporated for the purpose of completing the acquisition of TBSL by way of the CIRP process prescribed under the IBC Code. Total capacity of TSBL is 5.6 Million tonne per annum, The consideration to be paid is by issue of 1 fully paid up equity share of Rs 10 each of TSL for every 15 equity shares of Rs 2 each to the equity shareholders of TBSL (other than BNL). For captive power supply, the company also acquired 99.9 per cent stake in Bhushan Energy Limited (now known as Anugul Energy Limited) for Rs 765 crore in the insolvency resoution process in 2019. Tata Steel acquired Bhushan steel last year through IBC route and later renamed it to TBSL. For reprint rights: Syndications Today, How Tata Steel turned around bankrupt Bhushan Steel, Tata Motors FY21 net loss widens to Rs 13,395 crore; revenue slips, Ratan Tata-backed Moglix 13th unicorn in India this year, COVID-19 impact: Tata Motors extends warranty, free service period. Lead period between the acquisition and the merger is just to make sure that there no legal hassles which may arise to parent company. Tata Steel acquired BSL for Rs 35,200 crore in 2018. It also has a plant at Khopoli, Maharashtra which has good proximity to auto manufacturing hubs such as Pune and Gujarat. Consolidation of firm occurs when the commodity cycle is at its peak. BNL holds the equity investment in TBSL and is its holding company. endobj Tata Steel could exploit this opportunity with bigger production capacity. We also use third-party cookies that help us analyze and understand how you use this website. /ca 1 The capex has been funded by Tata Steel BSL through its internal accruals. However, you may visit "Cookie Settings" to provide a controlled consent. These cookies will be stored in your browser only with your consent.