Tata Steel Ltd said on Monday it has decided to sell a majority stake in its Southeast Asian businesses to a company controlled by China’s HBIS Group Co. Ltd for $327 million (Rs 2,326 crore).
The Indian company said in a stock-exchange filing it will sell its 100% stake in NatSteel Holdings Pte. Ltd and 67.9% stake in Tata Steel (Thailand) Public Company Ltd.
HBIS will own a 70% stake in the company that is buying the assets while Tata Steel will hold 30%.
The latest transaction reduces Tata Steel’s overseas footprint even as it adds muscle at home. Last year, Tata Steel took control of debt-laden Bhushan Steel and agreed to buy the steel business of Usha Martin. It also joined hands with Germany’s Thyssenkrupp for its European business.
TV Narendran, chief executive and managing director at Tata Steel, said the deal offer the Southeast Asia business robust growth opportunities, given the access to resources, technical expertise and regional understanding of HBIS.
Tata Steel entered into a definitive agreement with HBIS through wholly owned subsidiary TS Global Holdings Pte. Ltd. The transaction is likely to be completed in three to four months’ time, subject to regulatory approvals.
NatSteel’s revenue was Rs 5,181 crore for the year through March 2018, as against Rs 4,478 crore in the previous year. Tata Steel Thailand’s revenue was Rs 4,361 crore, up from Rs 3,767 crore the year before.
Chinese state-run HBIS Group was established in June 2008 by the merger of Tangshan Iron and Steel Group, and Handan Iron and Steel Group of Hebei province in China. It is among the largest steel makers in the world. The annual revenue of HBIS Group is in excess of $40 billion, according to the filing.
As on March 2018, Tata Steel Group had an annual crude steel capacity of 27.5 million tonnes.
Tata Steel’s consolidated revenue from operations stood at Rs 1,33,016.37 crore for the year through March 2018, up from Rs 1,17,419.94 crore the previous year. Profit after tax was Rs 17,762.81 crore as against a loss of Rs 4,168.57 crore in the previous year.
According to Tata Steel’s annual report, revenue from Southeast Asia operations for 2017-18 rose to Rs 9,542 crore from Rs 8,245 crore the year before. However, operating profit dropped to Rs 437 crore from Rs 528 crore during the period.
The operating profit fell despite improved selling prices “primarily due to negative sentiment in construction sector in both Singapore and Thailand and elevated scrap prices”, Tata Steel said on its performance in Southeast Asia.
