Tata Metaliks Ltd, a unit of Tata Steel, has decided to sell off its pig iron facility at Redi in Maharashtra, as the board undertook a strategic review of its portfolio.
It has entered an agreement with Fomento Resources to sell the 30,000-tonne per annum unit for Rs180 crore. The unit has a book value of Rs 114 crore.
Fomento has presence in iron ore mining in Goa, Karnataka and Maharashtra, and may be in a better position to obtain raw material.
The Redi facilities were acquired in 2006 by Tata Metaliks through an auction. Following the acquisition the company undertook several initiatives including refurbishing the blast furnaces and improving infrastructure.
However, the increase in global iron ore prices over the last five years, coupled with uncertainty in ore supply in western and southern India, prompted Tata Metaliks to take the decision.
The company made a strong effort to secure ore from the Dongarpal mines in Maharashtra, but it was estimated that it would take time before ore of quality suitable for use at Redi could be commercially mined.