Kirloskar Brothers takes over management of ailing Kolhapur Steel

Mumbai: Pump manufacturer Kirloskar Brothers Ltd has taken over the management of ailing Kolhapur Steel to meet its captive steel requirements.

The company said it would deposit Rs14.86 crore to repay Kolhapur Steel''s debt. Kolhapur Steel will now have majority of its directors nominated by Kirloskar Brothers, the company said in a filing with the Bombay Stock Exchange (BSE).

Kolhapur Steel had run into financial problems, and was referred to the Board of Industrial and Financial Reconstruction (BIFR).

KBL will pay Rs14.86 crore in a ''no lien'' account, which is earmarked for payment of dues of Kolhapur Steel to Shree Suvarna Sahakari Bank and another creditor, an order passed by BIFR on September 10, 2007 said.

Kolhapur Steel, incorporated in 1965, is engaged in the manufacture of alloy steel castings, pumps/valves, and general engineering goods. Kirloskar Brothers would be able to use the forging capacity of Kolhapur Steel to meet its captive demand.

Kirloskar Brothers buys almost half its steel cast requirement of 300 tonnes a month now, but the acquisition of Kolhapur Steel would allow it to produce its entire requirement of steel castings and even sell to other customers.

The share purchase agreement will be executed upon the approval by BIFR.

Earlier, Kirloskar Brothers vice-president finance AR Sathe had said the company was looking at buying a steel cast firm to meet a shortfall in captive castings production.