Essar Steel inks deal with Shree Precoated Steels
05 Aug 2009
In a strategic move to become the largest manufacturer of cold-rolled steel in the country, Essar Steel Limited has entered into a definite business transfer agreement to acquire Pune-based Shree Precoated Steels Limited (SPS) from the Ajmera Group of Companies, a Mumbai-based real estate firm.
The deal is expected to be in the range of Rs600-650 crore and is expected to close within 60 days, pending normal formalities.
It had been mulling an investment decision in SPS as Ajmera has been trying to exit its steel business for the past two years and has been in talks with major steel firms including JSW Steel and Tata Steel for the sale (See: Essar Steel close to acquiring Ajmera's steel unit for Rs700 crore).
''We have appointed Ernst & Young to arrive at a valuation based on the current assets and liabilities within 60 days," said Jatinder Mehra, chief executive officer of Essar Steel at a press conference in Mumbai yesterday.
He said, "Essar Steel expects the deal to add an earnings before interest, tax, depreciation and amortization (EBITDA) of about Rs200 crore in the next couple of years,''
Mehra had earlier in July told the media that SPS had fixed assets of Rs600 crore, debt of Rs175 crore, and a turnover of Rs2,800 crore.
