Tata Steel has been able to significantly make good on its big-ticket purchase of Bhushan Steel Limited (BSL) three years ago that potentially makes it the most successful acquisition by the company.
Tata Steel Ltd had stumped up Rs 35,200 crore for the Odisha-based plant which can produce 5.6 million tonnes. While the parent invested Rs 19,700 crore from its own balance sheet, it also put in place a 12-year long-term take-out financing of Rs 15,500 crore for Tata Steel BSL.
A back of the hand calculation suggests the company has been able to reduce leverage by Rs 9,300 crore, majority of which was achieved in the last fiscal alone. The gross debt at TSBSL came down by Rs 5,500 crore in 2020-21 due to strong cash flow from the business.
Tata Steel BSL is on its way to be merged with the parent as shareholders of the respective companies have approved the plan. TSBSL shareholders will get 1 share of Tata Steel for every 15 shares held in the company. The scheme of arrangement is pending approval from the National Company Law Tribunal.
Compared to TSBSL, the other big-ticket acquisitions of the company, namely Corus Group Plc, acquired in 2007, Natsteel and Millennium Steel (now Tata Steel Thailand) acquired in 2004 and 2005 respectively, have not panned out according to the plan.