Tata Steel Ltd is seeking approval from its shareholders for related party transactions (RPTs) worth Rs 58,676 crore for the financial year 2024. The company has identified 14 entities, both domestic and international, that will qualify under RPT as mandated by the Securities and Exchange Board of India’s (SEBI) listing regulations.
The largest share of the transactions is intended for domestic subsidiaries, such as NINL, Tata Steel Long Products Ltd, Tinplate Co Ltd, and joint ventures in the downstream value chain. These 14 transactions will account for approximately 24% of Tata Steel’s consolidated turnover for the financial year 2022. The resolutions highlight the complexity and size of Tata Steel’s India and international operations and underscore the basis for the company’s move to merge listed subsidiaries with itself.
Tata Steel had announced the merger of three listed subsidiaries, one listed associate company, and two wholly-owned unlisted companies with itself on September 22, 2022, to enhance the ease of doing business. The company has received no objection or adverse comments from the bourses for the listed entities and filed applications before the National Company Law Tribunals for the merger.
The unlisted Neelachal Ispat Nigam Ltd, acquired by Tata Steel’s subsidiary Tata Steel Long Products Ltd last year, will account for the largest chunk of RPT at Rs 11,800 crore, including Rs 800 crore equity subscription. Tata Steel hopes to ramp up production of long products maker NINL to 1.1 million tonnes in the financial year 2024.
A joint venture with Nippon Steel of Japan will account for the third largest share of RPT at Rs 6,525 crore. Tata Steel holds 51% in Jamshedpur Continuous Annealing & Processing Co. Pvt Ltd, which supplies steel to auto companies.
Similarly, a joint venture with Bluescope Steel for manufacturing sheeting material, coated steel, roof and wall cladding products finds itself in the list where Tata Steel envisages Rs 6,382 crore RPT in FY24. In both the joint ventures, Tata Steel plans to extend inter-corporate deposits to strengthen their businesses.
SEBI regulations mandate any transaction with a related party shall be considered material if the transaction(s) during a financial year exceeds Rs 1,000 crore or 10% of annual consolidated turnover of the company, whichever is lower. Prior permission of shareholders would be required for the same.
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