Tata Steel to acquire Brahmani River Pellets for Rs900 cr

Tata Steel will acquire 100-per cent stake in Brahmani River Pellets (BRPL) in a Rs900-crore all-cash deal, in a move that will help the company secure raw material and reduce costs at its Kalinganagar steel unit in Odisha.

Tata Steel said the transaction is based on an enterprise value of BRPL of Rs900 crore plus closing adjustments and is subject to completion of certain conditions precedent, including regulatory approvals.

The acquisition will be financed from internal cash flows, Tata Steel said, adding that the acquisition will also help Tata Steel ramp up capacity at Kalinganagar.

Tata Steel will buy out existing shareholders Aryan Mining and Trading Corporation Private Ltd and Moorgate Industries Group (MIG) in an all-cash deal, and hopes to complete the transaction in four months, according to a stock exchange filing.

BRPL was originally established by MIG (which was formed by the merger of Stemcor Group of companies as part of UK court-approved restructuring in 2015), which continues to hold a significant stake in BRPL through its shareholding in AMTC.

BRPL owns a 4 million tonnes per annum (mtpa) pellet plant in Jajpur, Odisha and a 4.7 mtpa iron ore beneficiation plant in Barbil, Odisha connected through a nearly 220 km underground slurry pipeline.

Commenting on the acquisition, Koushik Chatterjee, group executive director (finance and corporate) and member of the Tata Steel board, said, "The location of BRPL assets makes this very strategic to Tata Steel, especially our Kalinganagar operations and has significant operating synergies to make our Kalinganagar plat even more competitive for the future.

''The iron ore from our captive mine in the Joda and Khondbond region will get transferred in future through the slurry pipeline and reduce freight costs significantly, apart from the 4 mtpa pellet plant and other infrastructure which will enhance the operating efficiency and reduce costs of blast furnace operations in Kalinganagar.

''To build a similar facility would have taken significant time and costs and therefore, the acquisition is very timely as we are looking to ramp up the capacity of the Phase 1 at Kalinganagar. This is also a demonstration of our commitment to the state and people of Odisha."

BRPL had revenue of Rs452 crore in the last financial year, and owns two iron ore plants, according to the company's website.