Tata Steel to acquire steel business interests of NatSteel in Singapore, China, Malaysia, Thailand, Australia, Vietnam and the Philippines. The transaction provides Tata Steel an appropriate beachhead in key Asian growth markets.

The Tata Iron and Steel Company Limited (Tata Steel) (www.tatasteel.com) announced today that it has signed Definitive Agreements with NatSteel Limited (NatSteel), Singapore (www.natsteel.com.sg) to acquire all of NatSteel’s steel business for cash subject to regulatory approvals.

NatSteel will spin off its entire steel business into a wholly owned subsidiary, NatSteel Asia Pte Ltd (NatSteel Asia) subsequent to which Tata Steel will acquire 100 per cent of the equity interest in NatSteel Asia. The enterprise value of the acquisition is Singapore  $486.4 million (approximately Rupees 13,130 million). Under the terms of the agreement the enterprise value is subject to certain adjustments including those for any net debt, minority interest, other liabilities and for working capital variance relative to S$225 million.

NatSteel is the dominant steel producer of Singapore and owns steel mills in China, Thailand, Vietnam, the Philippines and Australia. The business is focussed on long products and has a cumulative capacity to produce about 2 million tons per annum of rebars, wire rods, pre-stressed concrete wires and strands. The acquisition also includes a 26 per cent equity interest owned by NatSteel in Southern Steel Berhad, a 1.3 million ton steelmaker in Malaysia. The transaction is expected to close in 5-6 months after obtaining all regulatory approvals. For the year 2003, the steel business reported a turnover of S$1.4 billion (Rupees 38.2 billion) and a profit before tax of S$47 million (Rupees 1.27 billion).

The acquisition is a significant step in Tata Steel’s globalisation initiative and will act as a beachhead investment for Tata Steel in the high growth geographies of China and South East Asia. Through this transaction, Tata Steel will increase its manufacturing footprint to 7 new countries in Asia. The acquisition has a strong strategic fit with Tata Steel’s current expansion plans and there are likely to be significant synergy benefits in the future as a consequence of the transaction.

Commenting on the transaction, Mr B. Muthuraman, managing director, Tata Steel said, “The acquisition of the steel business of NatSteel is an important step in Tata Steel’s plans to build a global business. NatSteel’s business provides Tata Steel access to key Asian steel markets including China. I believe that the acquisition will prove to be a good strategic fit and create value for Tata Steel shareholders. I welcome members of NatSteel’s management team and all employees to the Tata Steel family.”

Mr Oo Soon Hee, President of NatSteel, said, “With this transaction, NatSteel Asia will be well-positioned to weather the volatilities in the steel industry because it will be part of a much larger, fully integrated steel group with extensive resources. As part of Tata Steel, NatSteel Asia will be able to benefit from a much larger footprint in the steel industry as well as have access to significant resources, enabling us to further expand within Asia.”

The Corporate Advisory Group of Standard Chartered Bank was the exclusive financial advisor to Tata Steel on the transaction. Baker & McKenzie and AZB & Partners were the legal advisers to the transaction while Deloitte & Touche Singapore were the accountants to the transaction.

The Tata Iron and Steel Company Limited, an integrated steelmaker, is the largest private sector steel company in India. It is rated among the top four “world class” steel companies by World Steel Dynamics it has its own sources of raw materials, has modern and updated technologies and facilities and has a strong customer orientation. Its focus is on the automobile and construction industry. It has several notable global tie-ups including with Arcelor and Nippon Steel. It is a strong domestic player and has a presence in global markets.

For the year ended March 31, 2004, Tata Steel produced and sold 4 million tons of flat and long products recording a turnover of Rs 119.2 billion (US$2.6 billion) and a net profit of Rs 17.5 billion (US$380 million). For the quarter ended June 30, 2004, Tata Steel reported turnover of Rs 34.1 billion (US$ 741 million) and a net profit of Rs 7.5 billion (US$163 million). Tata Steel is currently implementing a 1 million ton expansion project at its works in Jamshedpur, India, which will raise its capacity to 5 million tons per annum by September 2005. Further expansion to 7.4 million tons per annum in advanced stage of planning and will be commissioned in 2008-09.

Besides steel products, which include hot rolled, coil cold rolled coil, galvanised sheets, rebars, wire rods, and wires. Tata Steel is a major player in India in ferro-alloys industry with a significant global presence. Tata Steel shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange of India.

NatSteel Ltd is a leading industrial group in the Asia Pacific with operations and joint ventures in 12 countries. The Group has two main divisions: Steel and Industrial. The steel division has a regional presence in Singapore, China, Malaysia, Thailand, the Philippines, Vietnam and Australia. Singapore serves as the hub providing R&D, engineering, logistics, sourcing and other support services. The Industrial Division is a key supplier of precast concrete, premix mortar and related construction materials in Singapore. Other NatSteel business activities include the supply of specialty and environmental chemicals, and the provision of engineering products and services. For the year ended December 31, 2003, the company achieved a turnover of S$1.7 billion (Rupees 46 billion) and profit before tax of S$88 million (Rupees 2.4 billion). NatSteel shares are listed on the Singapore Stock Exchange. As at closing of trading on August 13, 2004, NatSteel’s market capitalisation was S$874 million.