In addition to the purchase price, Tisco will also be entitled to receive all dividends that accrue on the TTL preference shares prior to the acquisition which will be paid as and when they are declared by TTL.

The vital funds infusion in a year dogged by international recession and domestic steel sector overcapacity was reported by Timken to the stock exchanges through a notice on Monday.

The notice has further informed that the name of Tata Timken will be changed to Timken India Ltd following the transaction, reflecting the increase in Timken's stake from 40 to 80 per cent.

The remaining 20 per cent of the shares are with the general public.

"The Timken Company has informed the exchange that on or after 11.3.99, Timken intends to acquire 25,499,989 equity shares having a par value of Rs 10 each and1,300,000 nine per cent cumulative redeemable preference shares of Rs 10 each that the Tata Iron & Steel Co Ltd (Tisco) hold in the share capital of Tata Timken Ltd," says a notice issued by the Bombay Stock Exchange.

The acquisition has already been approved by the Foreign Investment Promotion Board. The funds infusion will be vital for Tata Steel, since the seemingly unending recession has taken serious toll on its financial performance.

Its net profit for the first half of the current fiscal slumped to Rs 96.32 crore against Rs 176.48 crore posted in the same period last year.

Net sales dropped to Rs 2,817 crore as compared with Rs 3,016.2 crore in the first half of last year.

Coupled with the recent relief given from stiff import competition by the Union government through the fixing of floor import prices for Hot Rolled coils, the funds inflow is going to create a financial cushion for the company.