Tata Steel, the world’s seventh largest steel producer, on Thursday said it has agreed to sell 51% stake in its unit Tata Refractories (TRL) to Krosaki Harima Corp (KHC), valuing the company at Rs 1,130 crore. KHC is an associate company of Nippon Steel Corporation of Japan.
Under this arrangement, KHC will acquire 51% equity stake out of Tata Steel's current 77.46% stake in TRL. The transaction is subject to approval of relevant regulatory authorities in India and Japan, Tata Steel said in a statement.
Tata Steel will continue to hold 26.5 % in Tata Refractories. According to the steel major, this transaction will enable TRL to access the latest technology and diversify its product offering. It will also provide TRL an opportunity to easily access markets outside. On Wednesday, Tata Steel had said it signed a licensing agreement with mining major Rio Tinto for commercial development of environment-friendly direct iron smelting process, called HIsarna.
Refractories are high-temperature resistant materials that line equipment such as blast furnaces, which operate in conditions of extreme heat.
Hemant Nerurkar, managing director of Tata Steel, said, “I am happy with this association with Krosaki Harima and I am sure this partnership will propel the business to greater heights in future.”
Tata Steel shares on Thursday were marginally up by 0.60% to close at Rs 628.75 on the Bombay Stock Exchange.
TRL, a subsidiary of Tata Steel, meets the requirement of sophisticated refractories of consuming industries such as steel, glass, cement, non-ferrous and petrochemicals, both in India and abroad.
TRL achieved a consolidated turnover of Rs 1,000 crore in FY-2010-11 and is targeting a turnover of Rs 1,250 crore for the financial year 2011-12.
Its main works is strategically located at Belpahar in the district of Jharsuguda in Orissa, which is nearer to the major steel plants and raw material sources. TRL has also operations at Salem (Tamil Nadu), Jamshedpur, Samkhiyali (Gujarat), Jhansi and Hyderabad. It also has an overseas manufacturing unit in China. The company has two captive mines — Fireclay Mines at Talbasta, Orissa and a Quartzite Mines at Chhuinpalli in the district of Jharsuguda, i Orissa. Earlier this year, Nippon and Tata Steel said their Rs 2,300 crore cold-rolled sheet steel joint venture will begin production in India by late 2013.
Source: Financial Express