“At the market price of Tata Steel, the valuation of Tata Metaliks comes to Rs 101 crore. Due to capital expenditure made during the past four-five years and installation of new facilities at the plant, along with other measures taken by the company, the valuation is not reflecting the true and fair value of Tata Metaliks,” he said.
According to him, the swap ratio of 4:29 was against the interest of shareholders and should be revised if the merger had to go through. Budhia and the Patton group hold 2.38 per cent in Tata Metaliks. Some other minority shareholders had similar views. According to the rules, in a postal ballot, a simple majority of minority shareholders will ensure passage of a resolution. The company’s non-promoter holding is 49.91 per cent.
Tata Metaliks’ chairman, Koushik Chatterjee, said the merger was in the interest of shareholders, as the company’s sustainability was a main objective. “Given the oligopolistic nature of the raw material industry, captive sources of raw material had become critical for any company,” he said.
The pig iron industry was highly raw material-intensive and the industry was getting impacted because of a partial ban on iron ore mining and a weak rupee increasing the cost of imported coal/coke. Tata Metaliks had announced the merger proposal earlier this year. Chatterjee said it was still a proposal. Tata Steel and its subsidiary hold around 50 per cent in Tata Metaliks.
Tata Metaliks has also bought out Kubota and Metal One in the joint venture Tata Metaliks Kubota Pipes Limited, which was a downstream project. The idea is to merge Tata Metaliks Kubota and Tata Metaliks with Tata Steel.
Meanwhile Tata Metaliks may also look at reviving its project in Bengal at some point in time, though both Chatterjee and Sanjiv Paul, Tata Metaliks’ managing director said, it was too early to talk about it.
Tata Metaliks had planned a diversification project at Kharagpur in 2005, but called it off in 2009, as the government could not provide the land.