Tata Steel has decided to cancel the merger between its listed associate company, TRF, and itself due to a significant improvement in its business performance. The decision to merge TRF into Tata Steel was made in September 2022 as part of an effort to streamline the company's corporate structure. However, since then, Tata Steel has injected funds into TRF and placed orders with the material handling equipment manufacturer, which has helped TRF navigate through a challenging operating environment.
The infusion of funds and support from Tata Steel has led to an improvement in TRF's financials. On Wednesday, the TRF stock surged by 20% to hit the upper circuit on the BSE, closing at Rs 328. The trading volume in TRF shares also saw a substantial increase compared to the average daily volume over the last two weeks, indicating heightened investor interest.
Tata Steel, the flagship metal company of the Tata Group, has already merged five of its subsidiary arms, including Tata Steel Long Products, Tata Steel Mining, Tinplate Company of India, Tata Metaliks, and S&T Mining Company, into itself. This consolidation has resulted in a minor dilution of Tata Sons' stake in Tata Steel. Initially, Tata Steel planned to merge seven businesses into its operations.
Furthermore, Tata Steel announced that the merger process of The Indian Steel and Wire Products is in an advanced stage and is expected to be concluded by the first quarter of FY25. Additionally, the company proposes to merge Bhubaneswar Power and Angul Energy into its operations.
The decision to call off the TRF merger reflects Tata Steel's confidence in its improved business performance and strategic direction, as well as its commitment to optimizing its corporate structure for future growth and efficiency.