India’s steel major Tata Steel divests from NatSteel Vina, a joint venture company in Vietnam. The deal is part of Tata Steel’s strategy to completely exit its South East Asia operations.
NatSteelVina (NSV) is a step-down subsidiary of NatSteel Holdings Pte. Ltd. (NSH), which is a wholly-owned subsidiary of Tata Steel Limited. NatSteel Vina has a production capacity of 200,000mt per year. The company produces steel rebars and wire rods in Hanoi. NSV recorded revenue of Rs453 crore, which is 0.29pc of Tata Steel’s revenue. The sale is for a consideration of Rs36 crore for 56.5pc stake held by NSH.
The buyer is a Vietnam-based company Thai Hung Trading Joint Stock Company. Thai Hung is a multidisciplinary company with steel operations. The company engages in producing steel billets for the construction sector.
Tata Steel had planned to sell its equity stake in Tata Steel (Thailand) and NatSteel Holdings to China’s state-owned company HBIS Group for $327mn, but the deal was terminated as HBIS failed to secure approval from the Hebei province government.
South-East Asian operations of Tata Steel’s have been lower production and low-margin assets and the company’s management has been vocal about exiting these assets to pare debt. The decision is aimed to help Tata Steel refocus its energy and resources into India. In-line with this, it has acquired the stressed assets of Bhushan Steel and Usha Martin.