STEEL: Tata firm buys NatSteel for Rs 1,313 cr

India Inc is making its presence felt globally. In one of the biggest acquisitions by an Indian corporate abroad, Tata group firm Tata Iron and Steel Company has acquired Singapore steel firm NatSteel for Rs 1,313 crore in an all-cash transaction.

The acquisition will give Tata Steel access to key markets in seven countries, as NatSteel owns steel mills in Singapore, China, Thailand, Vietnam, Philippines, Malaysia and Australia. This is the Tata group's third major overseas takeover after the Tetley Tea and Daewoo truck unit buyouts.

According to the agreement signed in Singapore, NatSteel-listed on the Singapore Stock Exchange-will spin off its entire steel business into a wholly owned subsidiary called NatSteel Asia Pte Ltd. Tata Steel will then acquire 100 per cent equity in NatSteel Asia which has a total capacity of 2 million tonnes per annum.

Addressing a video news conference from Singapore, Tata Steel managing Director B Muthuraman said the entire transaction will be closed in 5 to 6 months and the company will look for more opportunities to grow abroad. Tisco, which has a capacity of 4 mmtpa is currently expanding its production capacity to 5 mmpta. It is expanding the capacity further to 7.4 mmpta in the next five years.

''Overnight NatSteel is providing us access to key Asian steel markets including China,'' said Muthuraman.''The demand for steel in the entire South-East Asian markets is growing and this (acquisition) is a strategic key point for growth from Tata Steel's point of view,'' he added.

''With this, NatSteel Asia will be well-positioned to weather the volatilities in the steel industry because it will be part of a much larger, fully integrated steel group with extensive resources,'' says Oo Soon Hee, President of NatSteel.

As part of Tata Steel, NatSteel Asia will be able to benefit from a much larger footprint in the steel industry as well as have access to significant resources, enabling NatSteel to expand in Asia, he added.

Muthuraman said the acquisition is a strong fit with Tata's current expansion plans and there are likely to be significant synergy benefits in the future as a consequence of the transaction.

For the year 2003, NatSteel reported a turnover of Rs 3,800 crore and made a profit before tax of Rs 127 crore. NatSteel is focused on long products of wire rods, pre-stressed concrete wires, and strands. The acquisition also includes a 26 per cent equity interest owned by NatSteel in Southern Steel Berhard, a 1.3 milion-tonne steelmaker in Malaysia.

Reacting to the news Tata Steel shares jumped by 3 per cent to close at Rs 266.15 in an otherwise bearish market.

Muthuraman said the management of NatSteel will not be disturbed and a new board of directors with Tata nominees will be formed after the company completes the transaction.

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