The Rs 800-crore TRyL’s operations span tolling and processing of steel on behalf of customers, distribution and retailing of galvanised plain and corrugated sheets.
KOLKATA: The Tatas are likely to buy out their partner, Ryerson Tull, US in their joint venture Tata Ryerson Ltd (TRyL).
The move follows Ryerson Tull, US putting itself up for sale in February after Harbinger Capital Partners, its single-largest shareholder, offered to transfer its holding to a slew of candidates to gain board control of the company. Several steel majors and private equity investors, including Arcelor Mittal, are believed to be interested in the steel solutions company.
Several companies have conducted due diligence prior to participating in an auction to gain controlling interest in Ryerson, reportedly valued at around $1.3 billion. Though no deadlines have been set for putting in firm bids, nor any timetable for concluding the auction, reports trickling in suggest that none of the bids was close to the desired valuation.
Houston-based, Metals US, controlled by private equity investors, is among those said to have a continuing interest in Ryerson. California-based Platinum Equity and Arcelor Mittal are also believed to be interested and had sought time to evaluate the target company before putting in a firm bid.
It is against this backdrop that the Tatas are firming up the option of buying out Ryerson’s interest in India since according to sources close to the deal, Tata Steel would not be keen to continue its partnership in TRyL with either global steel competitors or private equity investors that may gain control of the US steel solutions company.
TRyL’s managing director, Sandipan Chakravortty, could not be contacted as he is travelling abroad.
Industry sources pointed out that Tata Steel had every reason to get a firm grip on its joint venture company at a time when steel consumption was not only growing but new usage centres were emerging and throwing up new growth opportunities for TRyL, a company that acts as a bridge between consumers and producers of steel by offering customised solutions and distribution to users of steel products.
The Rs 800-crore TRyL’s operations span tolling and processing of steel on behalf of customers, distribution and retailing of galvanised plain and galvanised corrugated sheets.
The company has lined up investments to the tune of Rs 200 crore and aims to process 2 million tonnes of steel as well as set up steel service centres. It is doing one such for Tata Motors’ small car project at Singur.
Currently, just about 5% of steel produced in the country reaches customers through service companies like TRyL. However, this is expected to go up to 35% over the next three years and therefore, a few Japanese steel and trading companies are also considering setting up steel service centres in India.
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