The company, Tata Metaliks, had acquire the Redi facilities in 2006 through an auction. In its statement on the BSE, Tata Metaliks said, "After the acquisition the company undertook several initiatives including refurbishing the Blast Furnaces, create better infrastructure and extensive training of people." But this did not benefit the facilities as the global commodity prices increased by huge margins over the last five years.
To deal with it the company tried to secure raw material from Dongarpal mines in Maharashtra. To secure the same and using it to achieve commercial viability of the iron ore mine in terms of its quality and suitability for use at Redi plant would take significant time.
Considering these crunches, Tata Metaliks signed an agreement with Fomento Resources Group as it has iron ore mining in Goa, Karnataka and Maharashtra.
The divestment of the Redi facilities is being made for Rs 180 crore (book value around Rs 114 crore) plus working capital at closing. The agreement is still subject to shareholders and regulatory approvals.
Explaining how the proceeds will be used Tata Metaliks said, 'the divestment would be utilized for reshaping the balance sheet and future strategic investments.' And the it would focus on consolidating its Kharagpur operations. It would invest in the facilities to make the operations more competitive.