Tata Steel has sold its Singapore unit, NatSteel Holdings Pte, for ₹1,275 crore to TopTip Holding Pte, a Singapore-based steel and iron ore trading company.

Tata Steel will continue to own the wires business of NatSteel in Thailand (Siam Industrial Wires) as part of its downstream portfolio.

Based on the historical performance of the transacted business, the enterprise value to EBITDA works out to about 13 times. The transaction was closed on Thursday.

Reduce offshore debt

The consideration received will be used to reduce offshore debt, the company said. Tata Steel’s consolidated net debt at the end of FY21 was ₹75,389 crore, down 28 per cent compared to the previous year. The company is planning to effect an over $2 billion reduction in its gross debt during the current financial year.

Unsuccessful sell-offs

Earlier, Tata Steel had made unsuccessful attempts to sell-off low-margin assets abroad to pare debt. In January 2019, a definitive agreement was signed with an entity controlled by China’s state-run HBIS Group to sell a majority stake in NatSteel Holdings and Tata Steel (Thailand) for $327 million.

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However, in August 2019, the deal was called off as HBIS failed to get the requisite approvals from the Hebei government, one of the key conditions for the proposed transaction.

Following this, in November 2019, NatSteel Holdings sold its entire equity stake of 56 per cent in NatSteel Vina Co to Vietnam-based Thai Hung Trading Joint Stock Company for ₹36 crore.

Tata Steel bought NatSteel Singapore in 2004 for ₹1,313 crore, the first of its investments in South-East Asia. It acquired a Thai steel firm, Millennium Steel, two years later. Operations there, however, were lacklustre from the beginning with low production which led to a consistent struggle for profits.

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