Tata Steel completes acquisition of Usha Martin's steel business

Tata Sponge Iron Ltd, a subsidiary of Tata Steel, has announced that it has completed the long-awaited acquisition of Ushi Martin's steel business. The company is poised to take over the management of a million tonnes Usha Martin steel plant near Jamshedpur. With that, the 4,525 crore deal, which was delayed due to various regulatory reasons, is finally closed.

According to sources, Tata Sponge has deposited Rs 3,500 crore into a designated escrow account for the transaction as a down payment. The money will be held in an account with the State Bank of India (SBI) and will be used to pay off Ushi Martin's debt. Meanwhile, the payment of about Rs 700 crores will be deferred until the transfer of the iron ore mine, coal block and part of the land at a later stage.

The assets for sale include the Usha Martin steel mill in Jamshedpur, a 135 MW power plant, an iron ore mine and a coal block. In addition, the two sides signed a long-term wire rod supply agreement that would benefit Usha Martin's wire rope business, which it once decided to sell but was forced to abandon after weak buy-in.

Earlier in May 2018, a subsidiary of Tata Steel completed the acquisition of a 72.65% stake in Bhushan Steel Ltd (BSL), saddled with debt, in a bankruptcy auction. The build-up at the acquired plant helped Tata Steel India's operations post record steel production in the fourth quarter of fiscal 19.