Sandur Manganese to acquire 80% stake in Arjas Steel for an undisclosed sum

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sandur Manganese Ltd. informed the exchanges on Thursday that its board has approved the purchase of 80% stake in Arjas Steel Pvt. Ltd. as part of a strategic business acquisition.

The remaining 19.12% stake of Arjas Steel will be acquired by BAG Holdings Pvt. Ltd., an entity owned by one of the company’s promoters, Bahirji A. Ghorpade, who held a 3.1% stake in Sandur Manganese as of March 31, 2024.

Financial considerations for the acquisition have not been disclosed. However, the company highlighted that the Enterprise Value of Arjas Steel is nearly ₹3,000 crore and hence the value to acquire the 80% stake will be decided basis customary and agreed adjustments to the enterprise value as of the closing date.

Sandur Manganese expects to complete this transaction within seven months, subject to customary closing conditions in the Share Purchase Agreement (SPA). The acquisition will not require any regulatory approval, barring that of the Competition Commission of India (CCI).

The company, which is currently into the business of mining manganese and iron ore, generation of power and manufacturing ferroalloys & coke, decided to pursue an inorganic growth strategy to further accelerate its integration into steel, value-added products and unlock potential for various synergies.

Through this acquisition, Sandur Manganese expects potential benefits that will propel them to become a national integrated player in the steel industry.

For financial year 2022-2023, Arjas Steel reported a consolidated turnover of nearly ₹2,876 crore. It is an integrated specialty steel manufacturer located in Tadipatri with upstream and downstream facilities. Arjas Steel is among the top five players in India catering to the auto sector.

Its wholly-owned subsidiary, Arjas Modern Steel Pvt. Ltd. has an electric arc furnace-based steel plant located in Mandi Gobindgarh in the Punjab. This acquisition will also result in an indirect acquisition of the said subsidiary to such an extent.

Late last year, Sandur Manganese had announced a bonus issue in the ratio of 5:1, meaning that the company had issued five bonus shares for every one share held.

Shares of Sandur Manganese ended 0.4% higher on Thursday at ₹546. The stock has doubled in the last 12 months.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow