Shares of Tata Steel continued their losing streak for the second straight session on Tuesday after its board of directors approved the amalgamation of seven metal subsidiaries into itself last week. The stock emerged as the top laggard on the Bombay Stock Exchange (BSE) today, with the share price falling more than 3% intraday amid strong volume trade. The share of the country’s largest steel maker has dropped as much as 7.3% in two sessions, hitting its lowest level since the stock turned ex-date for a 1:10 stock split on July 28, 2022.

Tata Steel share price opened 1.25% higher at ₹101.1, against the previous closing price of ₹99.85 on the BSE. Reversing opening gains, the stock declined 3.3% to hit an intraday low of ₹96.55 amid a surge in selling activities as 68 lakh shares changed hands over the counter compared to the two-week average volume of 54.75 lakh scrips. The market capitalisation stood at ₹1.19 lakh crore at the time of reporting. In comparison, the BSE Sensex was quoting at 57,235, up 90 points, with 12 of 30 shares trading in red, led by Tata Steel, Titan, Kotak Mahindra Bank, ICICI Bank, and State Bank of India.

The steel major, in an exchange filing on September 23, said that its board of directors approved the amalgamation of seven metal subsidiaries of Tata Group with its parent company, Tata Steel. The list includes Tata Steel Long Products Limited, The Tinplate Company of India Limited, Tata Metaliks Limited, TRF Limited, The Indian Steel & Wire Products Limited, Tata Steel Mining Limited, and S & T Mining Company Limited. The merger needs to be approved by the shareholders of all the seven companies as well as its parent, Tata Steel, regulators, and stock exchanges.

As per the company, the amalgamation will provide an opportunity for reduction of operational costs through better order loads through pooling of orders, improved sales, and production planning. Also, the amalgamation will foster maintaining uniform KPIs benchmarks including, consumption of coke, fuel, and power, Fe-bearing material, etc. which will reduce the overall cost of production and promote efficiencies, it said.

The proposed amalgamation would integrate all long products businesses under a single umbrella fostering an integrated approach to market. Sales and distribution networks will be pooled, facilitating an increase in market penetration, it added.

“In line with Group level 5S strategy – simplification, synergy, scale, sustainability, and speed – proposed amalgamation will simplify group holding structure, improve agility to enable quicker decision making, eliminate administrative duplications, consequently reducing administrative costs of maintaining separate entities,” the steelmaker said in a statement.

In May this year, Tata Steel announced a sub-division of the equity shares of the company in a ratio of 1:10 to provide enhanced liquidity in the capital market by widening the shareholder base and making it more affordable for small investors. The company had fixed July 29, 2022, as the record date for the purpose of sub-division of equity shares of face value ₹10 each into shares of the face value of ₹1 each.

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