India court approved Tata's purchase of the Steel Corp
Date:2018-06-08 View:754 Tag:India court approved Tata's purchase of the Steel Corp
After getting approval from the National Company Law Tribunal (NCLT) in India on Tuesday, the India Steel Corp (Tata Steel) will open a takeover process for the bankrupt Steel Corp (Bhushan Steel). The industry expects that the India flat material industry will be further integrated.
In the iron and steel industry in India, 6 companies account for 85% of the flat material production capacity. They are Tata Steel, JSW Steel, Steel Authority of India, Pu Shao steel, Bhushan Power and Steel Corp (Essar Steel). The last three companies are going through bankruptcy proceedings according to the new bankruptcy law of India.
CRISIL, a rating agency, said that, according to the various acquisitions, the concentration of the India flat market is expected to be controlled from 85% of the current 6 steel enterprises and will be further promoted to 85% market share by 3-4 enterprises.
Rahul Prithian, director of the CRISIL Institute, said, "the price gap between flat timber imports and domestic prices is expected to shrink as the concentration of the India flat industry increases. In addition, higher capacity utilization and output, plus better pricing, will enable Indian Iron and Steel Company to make better profits.
CRISIL said that Tata Steel Corp can produce about 10 million tons of flat material per year, while Pu Shao steel has flat capacity of 5 million tons per year. The merger will make the former the first major manufacturer of flat wood in India, because the flat wood industry is now leading the JSW Steel, with a flat timber capacity of about 13 million tons annually.
In 2017, the government made extensive liquidation of bad loans in India's Bank credit, and 12 companies, including PU Shao steel, applied for bankruptcy in the same year.
According to the takeover plan, Tata Steel will pay about 352 billion rupees ($5 billion 210 million) to the creditors of PSU steel. In addition, Bamnipal Steel, a wholly owned subsidiary of Tata, will subscribe to 72.65% of PSAO steel and the price will be about 159 billion rupees.
After the examination and approval, the national company law court dismissed the PSU steel Employees Union and the creditor group (Lour & trobuo) for questioning the purchase plan.