TRF stock rose 20% on Wednesday, reaching its upper circuit limit after it canceled its merger with its parent company.
On the Bombay Stock Exchange (BSE), TRF shares were up 19.99 percent to Rs 327.70 per share.
The development comes after TRF opted not to pursue its merger with Tata Steel, its parent firm.
TRF indicated that the firm has been doing well financially in recent months, therefore they do not need to merge anymore. They said that Tata Steel has been assisting them by making orders and investing in the firm. TRF has also been attempting to improve its finances by recovering money owed to consumers and figuring out how to spend less money while using its assets more efficiently.
Where does Merger lead to?
It should be mentioned that Tata Steel’s board has agreed to abandon the merger agreement, and TRF has filed a plea with the National Company Law Tribunal (NCLT) to officially withdraw the merger proposal. TRF’s shareholders will meet on February 8 to debate this.
TRF’s promoters, who are the persons or companies that founded the firm, hold around 34.6 percent. The decision to terminate the merger comes after Tata Steel revealed intentions to consolidate all of its metal divisions, including TRF, into itself in September 2022.
As part of this scheme, TRF stockholders were intended to get 17 Tata Steel shares for every ten TRF shares they owned. TRF shares have nearly recovered to the same price they were before the merger announcement in September 2022.
What does TRF say in a stock exchange filing?
“Over the last few quarters, the Company has seen improvement in business performance owing to ongoing significant support from Tata Steel in the form of placement of order(s) and infusion of capital coupled with Company’s efforts on enhanced debtor collections and, cost and asset optimization,” the company stated in its filing with the stock exchange.
“Given the above, the Board has decided not to proceed with the Scheme and authorized its withdrawal on February 6, 2024. The Tata Steel Board of Directors has also agreed to withdraw the Scheme by the Board’s decision,” according to the company’s exchange statement. TRF has also been improving its finances by recovering money owed to consumers and finding methods to spend less money while using its assets more efficiently.
What about the other mergers?
In September 2022, Tata Steel authorised the merger of Tata Steel Long Products, The Tinplate Company of India, Tata Metaliks, TRF Limited, Indian Steel & Wire Products, Tata Steel Mining, and S&T Mining Company.
Tata Steel’s merger with Indian Steel & Wire Products is nearing completion, whereas TRF’s merger has been called off. The rest has been finished.
“The merger of five companies with a cumulative annual turnover of ~Rs 19,700 cr in FY23, in record time, presents a unique opportunity for consolidation of the downstream operations,” the company said in a statement.
The proposed approach aimed to enhance operational integration and facility utilization, increase customer satisfaction and services, improve working capital and cash flow management efficiency, expedite project execution, and reduce logistical costs.
Tata Steel was trading at Rs 145.45 on the NSE at 11:15 a.m., up 0.5 percent from the previous close.
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