Presented by

Group 2
Introduction
 Bhushan Steel was acquired by Tata Steel, renamed as Tata Steel BSL ltd
 Tata Steel has emerged the first company to acquire a stressed asset under the new
Insolvency and Bankruptcy Code
 Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary of Tata Steel, controlling stake of
72.65 per cent in Bhushan Steel Ltd (BSL) on 18 May 2018
 Horizontal Acquisition operating within same industry
 Had a large D/E ratio(3.5 times more), is a highly leveraged company.
 Largest manufacturer of auto-grade steel in India
 About Rs 35,000 crore reduction of NPAs of PSBs in Bhushan Steel case
 On due diligence : Bhushan steel had most balanced plant and asset that required
minimum CAPEX to run maximum capacity
Synergies
 Production capacity is 5.6 million tonnes and it has its plants at Sahibabad, Khopoli
and Odisha
 The Odisha plant is close to the Kalinganagar plant of Tata Steel
 Bhushan has an iron ore (key raw material) mine in Sundergarh, Odisha, which has
a reserve of 92 million tonnes per annum
 Production and supply of flat steel products, has been a long-term supplier to
renowned manufacturers in the automobile sector
 Bhushan steel plant Mera Mandali and Khopoli near to sea ports
 Synergies in logistics, procurement and marketing.
Strategy
 Tata Steel can raise production capacity to 21 million tonnes per annum (MTPA) from the current 13 MTPA
 EBITDA for the steelmaker may improve to Rs 11,000 per tonne (from Rs 7,800 per tonne at 58-60 per cent
utilisation rate)
 Active in auto sector
 Global Steel Price on a Rise following imposition of output cuts in China
 The commodity cycle for steel is in upsurge, and Tata Steel is looking to cash this opportunity before the
downturn, and definitely hedge some part against the higher cost of acquisition
 Overall synergies due to raw material linkage from mines, logistics, procurement and marketing.
 Difficult to come up with a greenfield project at a strategic location, close to the current operational area of
Tata Steel.
Deal Value & Structure

 Total Value 36400 crore

 72.65% stake purchase of 79 Crore shares by BNPL
 Settlement amount 35200 Crore
 1200 Crore to operational creditors over period of 1 year

 External Bridge loan 16500 Crore availed by BNPL

 Remaining investment by Tata Steel
Way Forward
 To reach the 4.5-5.5 million tonne capacity which will bring down cost and
improve EBITDA
 Ensuring full capacity utilization
 Procurement, Sales and Marketing and Operating teams to work together
 around 40 people are working on ground level to bridge gaps between Bhushan
and Tata Steel
 Aims at increasing the volume by 20 to 25 %by 2025
 Focus on creating a sustainable portfolio in Europe and generating higher
operating cash flows
 Plans to grow beyond steel into new materials like graphene, carbon fibre, advance
ceramics etc.
Thank you