Kirloskar Ferrous Industries, a leading manufacturer of pig iron and gray iron castings, has taken a majority stake in specialist seamless tube maker Indian Seamless Metal Tubes (ISMT) for Rs 670 crore.
The deal involves Kirloskar investing Rs 670 crore in ISMT, of which Rs 476.63 crore represents a 51.25% stake and the remaining Rs 194 crore is an unsecured loan to the tube maker, the sources said. companies in a press release.
The transaction, advised by city-based investment banker Singhi Advisors, also involves an open offer to acquire up to 25.05% of ISMT worth Rs 239.7 crore, under take standards. control of Sebi.
The proceeds will be used for a one-time settlement of ISMT loans of approximately Rs 3,359 crore. The one-time settlement of Rs 670 crore was approved by its lenders in February.
ISMT is a major manufacturer of seamless tubes with an integrated steel mill, as well as a debt-financed power plant. But the investment didn’t go as planned, leading to stress and the eventual sale.
The lenders, holding 70% of the principal debt, had planned to allocate the debt to asset reconstruction companies, but due to the pandemic this did not work out, leading to a one-time settlement accompanied of a change of direction.
This is the second instance in the listed company space following the acquisition of CG Power & Industrial Solutions by the Murugappa Group in 2020 in a single settlement accompanied by a management change.
With the acquisition of ISMT, KFIL seeks to integrate its iron ore business with seamless tubes on a consolidated level and diversify the current product portfolio with steel and seamless tubes.
For the first nine months of FY22, KFIL reported revenue of Rs 2,716 crore versus Rs 1,291 crore a year ago and recorded net profit of Rs 340 crore versus Rs 167 crore.
ISMT is the nation’s largest integrated manufacturer of specialty seamless tubes and produces tubes in the diameter range of 6-273mm and operates an alloy steel plant that produces a wide range of alloy steels from 20-225mm of diameter.
ISMT reported a 100% increase in revenue to Rs 1,553 crore for the first nine months of FY22 from Rs 768 crore in the same period of FY21, but posted a loss net of Rs 171 crore during the period compared to Rs 231 crore a year ago. .
Founded in 1991, Kirloskar Ferrous Industries is a leading manufacturer of pig iron and gray iron castings. The group has a 130-year manufacturing and engineering heritage.
It supplies foundries across the country and contributes to automotive, motors and compressors, textiles, pumps and other manufacturing industries.
(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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