Tata Steel to infuse Rs 6,000 crore in Neelachal, PSU bought in 2022
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MUMBAI: Tata Steel is set to invest Rs 6,000 crore in Neelachal Ispat Nigam, a metal manufacturing enterprise the T V Narendran-led company had acquired through govt’s privatisation programme in 2022.
The money will be used to redeem non-convertible preference shares of Neelachal held by Tata Steel and for general corporate purposes. After the fund infusion, Tata Steel’s stake in Neelachal – which it had acquired for Rs 12,100 crore – will go up to about 100% from 99%.
Neelachal has a 1.1 million tonnes steel facility at Kalinganagar, Odisha, along with iron ore mines of 90 million tonnes. After Neelachal came into Tata Steel’s fold, its losses have reduced to Rs 639 crore in financial year 2024 from Rs 1,216 crore in financial year 2022, while its revenues have jumped to Rs 5,562 crore from Rs 260 crore during the same period.
State Govts To Levy
Tax On Minerals
On the Supreme Court‘s July 25 decision that state govts have power to levy tax on mining activities, Tata Steel said it estimates an impact of Rs 17,347 crore on its books. Since there is no clarity on the period of applicability of this levy, it has listed the amount as contingent liability in its financial statements. In 2005, Odisha govt introduced cess on mineral bearing land.
In financial year 2006, Tata Steel received a demand of Rs 129 crore in respect of its mines in Odisha for financial years 2005 and 2006. Subsequently, it moved the Odisha high court challenging the constitutional validity of the state’s move. In Dec 2005, the court held that the state doesn’t have the authority to levy tax on minerals. Odisha then challenged this judgment before the SC.
Buys Stake In Sister Co
Tata Steel will acquire 26% in TP Parivart, an renewable energy arm of sister company, Tata Power, for Rs 35 crore. The move is to optimise Tata Steel’s electricity cost by replacing grid power with the cost-effective renewable power. In 2023, it had acquired a similar stake in TP Vardhaman Surya, also a subsidiary of Tata Power. According to that deal, Tata Power will set up a solar-wind hybrid power facility at Tata Steel’s Jamshedpur facility, replacing a part of the metals major’s coal-based power generation.
The money will be used to redeem non-convertible preference shares of Neelachal held by Tata Steel and for general corporate purposes. After the fund infusion, Tata Steel’s stake in Neelachal – which it had acquired for Rs 12,100 crore – will go up to about 100% from 99%.
Neelachal has a 1.1 million tonnes steel facility at Kalinganagar, Odisha, along with iron ore mines of 90 million tonnes. After Neelachal came into Tata Steel’s fold, its losses have reduced to Rs 639 crore in financial year 2024 from Rs 1,216 crore in financial year 2022, while its revenues have jumped to Rs 5,562 crore from Rs 260 crore during the same period.
State Govts To Levy
Tax On Minerals
On the Supreme Court‘s July 25 decision that state govts have power to levy tax on mining activities, Tata Steel said it estimates an impact of Rs 17,347 crore on its books. Since there is no clarity on the period of applicability of this levy, it has listed the amount as contingent liability in its financial statements. In 2005, Odisha govt introduced cess on mineral bearing land.
In financial year 2006, Tata Steel received a demand of Rs 129 crore in respect of its mines in Odisha for financial years 2005 and 2006. Subsequently, it moved the Odisha high court challenging the constitutional validity of the state’s move. In Dec 2005, the court held that the state doesn’t have the authority to levy tax on minerals. Odisha then challenged this judgment before the SC.
Buys Stake In Sister Co
Tata Steel will acquire 26% in TP Parivart, an renewable energy arm of sister company, Tata Power, for Rs 35 crore. The move is to optimise Tata Steel’s electricity cost by replacing grid power with the cost-effective renewable power. In 2023, it had acquired a similar stake in TP Vardhaman Surya, also a subsidiary of Tata Power. According to that deal, Tata Power will set up a solar-wind hybrid power facility at Tata Steel’s Jamshedpur facility, replacing a part of the metals major’s coal-based power generation.
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