[Ferro-Alloys.com] Indian Metals and Ferro Alloys to acquire Tata Steel's ferro alloys plant for ?610 crore

Shares of Indian Metals and Ferro Alloys Ltd. (IMFA) gained nearly 4% on Tuesday, November 4, after the company said its board of directors has approved the acquisition of Tata Steel's fero alloys plant at Kalinganagar, Odisha. However, the stock gave up those gains soon after to trade in the red.

The acquisition value is worth ?610 crore in addition to the GST component and the value of net working capital.  The transaction is expected to be completed in three to six months.

IMFA said the acquisition is in line with its strategy to drive the next phase of growth in its ferro alloys business by expanding capacity.

The locational advantage and cost synergies due to proximity to company's captive mines and upcoming greenfield project in Kalinganagar will augment the its ability to cater to new opportunities with a focus on the domestic market, IMFA's statement said added.

IMFA is set to double its ferro chrome capacity with the help of this acquisition. From the current capacity of 2.84 lakh tonne, and the organic expansion of 1 lakh tonne, the total capacity, post expansion would be 5.34 lakh tonne.

The acquisition positive for the IMFA as it gives it scale. Its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for financial year 2025 was ?531 crore. Chrome Ore being short in supply, locational advantage and cost synergies due to proximity to captive mines are some other advantages.

Shares of IMFA are witnessing choppy moves after the acquisition announcement. The stock currently trades 2.22% higher at ?1,237. The stock has risen 6.2% in the last one month.

Indian Metals & Ferro Alloys Ltd. (IMFA) has signed definitive agreements to acquire Tata Steel's ferro chrome plant at Kalinganagar, Odisha, for a base consideration of Rs 610 crore. The acquisition adds 99 MVA furnace capacity - 66 MVA operational and 33 MVA under construction - taking IMFA's total installed capacity beyond 0.5 million tonnes per annum, the company said in a statement.

With this deal, IMFA becomes India's largest and the world's sixth-largest ferro-chrome producer. Spread across 115 acres, the Kalinganagar facility includes four furnaces capable of producing 100,000 tonnes per annum, expected to rise to 150,000 tonnes once a fifth furnace is commissioned. The plant's proximity to IMFA's captive chrome ore mines is expected to yield cost savings and operational synergies.

The transaction, subject to regulatory approvals, is likely to close within three months.

Calling the acquisition "transformational," IMFA Managing Director Subhrakant Panda said it would fast-track the company's expansion plans and strengthen its position in the domestic market amid growing demand for ferrochrome. He added that the deal will be funded through internal accruals, underscoring IMFA's financial strength. The company also reported second-quarter earnings, with net profit declining to Rs 98.77 crore from Rs 125.72 crore a year back.

Subhrakant Panda, Managing Director of IMFA, said: "Ferro Chrome prices moved up noticeably towards the end of the second quarter due to elevated chrome ore costs for non-integrated producers and a sharp cutback in output in South Africa. This is partially reflected in the current results, and we expect to see the full impact in the ongoing quarter with the increase in benchmark as well as higher spot price.

Indian Metals & Ferro Alloys has acquired Tata Steel’s ferro chrome plant in Kalinganagar, Odisha for ? 610 crore. The company has signed definitive agreements and the deal will add 99 MVA furnace capacity (66 MVA existing and 33 MVA under construction), making IMFA the country’s largest producer and sixth largest globally with total capacity in excess of 0.5 million tonnes.

Subject to the satisfaction of agreed conditions and requisite approvals, the transaction is expected to close in 3 months.

Spread across 115 acres in Kalinganagar, the facility being acquired consists of four furnaces capable of producing 1 lakh tonnes per annum, which will further increase to 1.50 lakh tpa once the fifth furnace is commissioned, said the company.

The acquired facility is close to the company’s captive chrome ore mines, and the upcoming greenfield expansion will lead to significant costs savings and operational synergies, it added.

Subhrakant Panda, Managing Director, IMFA, said along with ongoing greenfield expansion, it will take total installed capacity beyond 0.5 million tonnes enabling the company to increase market share with a particular focus on domestic sales when demand for ferro chrome is increasing due to India’s rapid economic growth.The company is committed to building on the strong foundation of a fully integrated business model, which will not only result in cost savings and operational synergies but also add up to the bottom line. Further, the acquisition will be funded from internal accruals, he said.

• [Editor:tianyawei]