Tata Steel, one of India’s largest steelmakers is planning to buy the Indian iron ore assets of the British based largest steel company – Stemcor. Tata Steel has another company as its biggest competitor i.e. Jindal Steel and Power Limited, who is also equally keen in buying the Stemcor assets.
Stemcor is presently under debt of more than USD 1 billion of loans taken by them. They consider gaining some funds by selling away their assets in the market to giant steelmakers. The steel industry has slowed down in the global market resulting to which Stemcor had to face such financial crisis.
Stemcor is thus planning to sell away its biggest asset i.e. iron ore mines of Odisha which could fetch them around USD 800 million.
Tata Steel is thus interested in buying the iron ore mines to fulfill the needs and demands of its steel making industry.
Stemcor has got payment time period due up till mid of September, thus it plans to sell off the assets by August itself. The sale of Odisha iron ore mines would bring along with it a loss of 30% of their revenue. They also have future plans of shrinking their business in addition.
Iron ore is the most demanded raw material in the Indian market and Tata Steel is not the only steelmakers of the country. Thus, Stemcor is likely to gain some profit for their assets if the competition remains tough among all the steel makers of the country. Increase in demand for the asset will bring in more income for the owners.