Usha Martin part of strategic acquisitions

Tata Steel Ltd will improve the share of long products in its business following acquisition of Usha Martin Ltd. It is bidding for Usha Martin.

The acquisition brings in valuable product diversification for Tata Steel’s India business, which has a disproportionate skew toward flat steel products, said S&P Global Ratings on 25 Sept 2018.

Usha Martin has a rare integrated steel-making business with predominantly long steel products.

“At the proposed transaction value of Rs.43 billion-Rs.47 billion, we do not expect the acquisition to have a material negative impact on Tata Steel’s financial profile or leverage.

“We expect Tata Steel to pay cash for the acquisition, which is through a slump sale, said the rating agency.

Robust prices and “strong volume outlook continue to mark India’s steel market”, it pointed out.

S&P expects Tata Steel to continue with its strategy of bidding for bankrupt steel assets in India as it strives to maintain leadership in a high growth market.

This is seen in the company’s Rs.350 billion acquisition of Bhushan Steel Ltd and the current bid for Usha Martin.

“We expect Tata Steel’s acquisition strategy to consume all the upside momentum that high steel prices and a rights issue would have otherwise provided to the ratings (BB-/Stable/–),” it said. fiinews.com